Correlation Between JD Sports and FEDEX

Can any of the company-specific risk be diversified away by investing in both JD Sports and FEDEX 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 FEDEX 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 FEDEX P 495, you can compare the effects of market volatilities on JD Sports and FEDEX 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 FEDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and FEDEX.

Diversification Opportunities for JD Sports and FEDEX

0.89

Correlation Coefficient

JD Sports  FEDEX

Very poor diversification

The 3 months correlation between JDDSF and FEDEX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and FEDEX P 495 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEDEX P 495 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 FEDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEDEX P 495 has no effect on the direction of JD Sports i.e., JD Sports and FEDEX go up and down completely randomly.

Pair Corralation between JD Sports and FEDEX

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the FEDEX. In addition to that, JD Sports is 1.66 times more volatile than FEDEX P 495. It trades about -0.17 of its total potential returns per unit of risk. FEDEX P 495 is currently generating about 0.0 per unit of volatility. If you would invest  8,766  in FEDEX P 495 on December 23, 2024 and sell it today you would lose (51.00) from holding FEDEX P 495 or give up 0.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	80.33%
Values	Daily Returns

JD Sports Fashion  vs.  FEDEX P 495

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.

FEDEX P 495

Risk-Adjusted Performance

Insignificant

Over the last 90 days FEDEX P 495 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FEDEX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JD Sports and FEDEX

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

The idea behind JD Sports Fashion and FEDEX P 495 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.