Correlation Between JD Sports and Lewis Clark

Can any of the company-specific risk be diversified away by investing in both JD Sports and Lewis Clark 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 Lewis Clark 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 Lewis Clark Bancorp, you can compare the effects of market volatilities on JD Sports and Lewis Clark 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 Lewis Clark. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Lewis Clark.

Diversification Opportunities for JD Sports and Lewis Clark

-0.29

Correlation Coefficient

JD Sports  Lewis Clark

Very good diversification

The 3 months correlation between JDDSF and Lewis is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Lewis Clark Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lewis Clark Bancorp 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 Lewis Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lewis Clark Bancorp has no effect on the direction of JD Sports i.e., JD Sports and Lewis Clark go up and down completely randomly.

Pair Corralation between JD Sports and Lewis Clark

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Lewis Clark. In addition to that, JD Sports is 2.61 times more volatile than Lewis Clark Bancorp. It trades about -0.04 of its total potential returns per unit of risk. Lewis Clark Bancorp is currently generating about 0.22 per unit of volatility. If you would invest  2,600  in Lewis Clark Bancorp on September 22, 2024 and sell it today you would earn a total of  400.00  from holding Lewis Clark Bancorp or generate 15.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

JD Sports Fashion  vs.  Lewis Clark Bancorp

JD Sports Fashion

Risk-Adjusted Performance

0 of 100

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 nearly stable basic indicators, JD Sports is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Lewis Clark Bancorp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lewis Clark Bancorp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, Lewis Clark disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD Sports and Lewis Clark

The main advantage of trading using opposite JD Sports and Lewis Clark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Lewis Clark 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 Lewis Clark will offset losses from the drop in Lewis Clark's long position.

The idea behind JD Sports Fashion and Lewis Clark Bancorp 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.