Correlation Between JD Sports and SL Green

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

Diversification Opportunities for JD Sports and SL Green

0.45

Correlation Coefficient

JD Sports  SL Green

Very weak diversification

The 3 months correlation between JDDSF and SLG is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty 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 SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of JD Sports i.e., JD Sports and SL Green go up and down completely randomly.

Pair Corralation between JD Sports and SL Green

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the SL Green. In addition to that, JD Sports is 1.72 times more volatile than SL Green Realty. It trades about -0.18 of its total potential returns per unit of risk. SL Green Realty is currently generating about -0.1 per unit of volatility. If you would invest  7,668  in SL Green Realty on October 24, 2024 and sell it today you would lose (949.00) from holding SL Green Realty or give up 12.38% of portfolio value over 90 days.

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

JD Sports Fashion  vs.  SL Green Realty

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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SL Green Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SL Green Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with JD Sports and SL Green

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

The idea behind JD Sports Fashion and SL Green Realty 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.