Correlation Between JD Sports and MARATHON

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

Diversification Opportunities for JD Sports and MARATHON

-0.47

Correlation Coefficient

JD Sports  MARATHON

Very good diversification

The 3 months correlation between JDDSF and MARATHON is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and MARATHON PETE P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARATHON PETE P 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 MARATHON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARATHON PETE P has no effect on the direction of JD Sports i.e., JD Sports and MARATHON go up and down completely randomly.

Pair Corralation between JD Sports and MARATHON

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the MARATHON. In addition to that, JD Sports is 3.08 times more volatile than MARATHON PETE P. It trades about -0.17 of its total potential returns per unit of risk. MARATHON PETE P is currently generating about 0.08 per unit of volatility. If you would invest  10,422  in MARATHON PETE P on December 23, 2024 and sell it today you would earn a total of  431.00  from holding MARATHON PETE P or generate 4.14% return on investment over 90 days.

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

JD Sports Fashion  vs.  MARATHON PETE P

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.

MARATHON PETE P

Risk-Adjusted Performance

Modest

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

Pair Trading with JD Sports and MARATHON

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

The idea behind JD Sports Fashion and MARATHON PETE P 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .