Correlation Between JD Sports and CoreCivic

Can any of the company-specific risk be diversified away by investing in both JD Sports and CoreCivic 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 CoreCivic 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 CoreCivic 475 percent, you can compare the effects of market volatilities on JD Sports and CoreCivic 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 CoreCivic. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and CoreCivic.

Diversification Opportunities for JD Sports and CoreCivic

-0.15

Correlation Coefficient

JD Sports  CoreCivic

Good diversification

The 3 months correlation between JDDSF and CoreCivic is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and CoreCivic 475 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreCivic 475 percent 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 CoreCivic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreCivic 475 percent has no effect on the direction of JD Sports i.e., JD Sports and CoreCivic go up and down completely randomly.

Pair Corralation between JD Sports and CoreCivic

Assuming the 90 days horizon JD Sports Fashion is expected to generate 1.49 times more return on investment than CoreCivic. However, JD Sports is 1.49 times more volatile than CoreCivic 475 percent. It trades about -0.01 of its potential returns per unit of risk. CoreCivic 475 percent is currently generating about -0.04 per unit of risk. If you would invest  153.00  in JD Sports Fashion on October 7, 2024 and sell it today you would lose (7.00) from holding JD Sports Fashion or give up 4.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

JD Sports Fashion  vs.  CoreCivic 475 percent

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

CoreCivic 475 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CoreCivic 475 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CoreCivic 475 percent investors.

Pair Trading with JD Sports and CoreCivic

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

The idea behind JD Sports Fashion and CoreCivic 475 percent 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.