Correlation Between JD Sports and Icon Energy

Can any of the company-specific risk be diversified away by investing in both JD Sports and Icon Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining JD Sports and Icon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JD Sports Fashion and Icon Energy Corp, you can compare the effects of market volatilities on JD Sports and Icon Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in JD Sports with a short position of Icon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Icon Energy.

Diversification Opportunities for JD Sports and Icon Energy

0.91

Correlation Coefficient

JD Sports  Icon Energy

Almost no diversification

The 3 months correlation between JDDSF and Icon is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Icon Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Energy Corp and JD Sports is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on JD Sports Fashion are associated (or correlated) with Icon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Energy Corp has no effect on the direction of JD Sports i.e., JD Sports and Icon Energy go up and down completely randomly.

Pair Corralation between JD Sports and Icon Energy

Assuming the 90 days horizon JD Sports Fashion is expected to generate 0.2 times more return on investment than Icon Energy. However, JD Sports Fashion is 4.96 times less risky than Icon Energy. It trades about -0.17 of its potential returns per unit of risk. Icon Energy Corp is currently generating about -0.28 per unit of risk. If you would invest  146.00  in JD Sports Fashion on December 27, 2024 and sell it today you would lose (40.00) from holding JD Sports Fashion or give up 27.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

JD Sports Fashion  vs.  Icon Energy Corp

JD Sports Fashion

Risk-Adjusted Performance

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Icon Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Icon Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with JD Sports and Icon Energy

The main advantage of trading using opposite JD Sports and Icon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Icon Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Icon Energy will offset losses from the drop in Icon Energy's long position.

The idea behind JD Sports Fashion and Icon Energy Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.