Correlation Between JD Sports and 594918BY9

Can any of the company-specific risk be diversified away by investing in both JD Sports and 594918BY9 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 594918BY9 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 MICROSOFT P 33, you can compare the effects of market volatilities on JD Sports and 594918BY9 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 594918BY9. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and 594918BY9.

Diversification Opportunities for JD Sports and 594918BY9

0.1

Correlation Coefficient

JD Sports  594918BY9

Average diversification

The 3 months correlation between JDDSF and 594918BY9 is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and MICROSOFT P 33 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MICROSOFT P 33 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 594918BY9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MICROSOFT P 33 has no effect on the direction of JD Sports i.e., JD Sports and 594918BY9 go up and down completely randomly.

Pair Corralation between JD Sports and 594918BY9

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the 594918BY9. In addition to that, JD Sports is 7.76 times more volatile than MICROSOFT P 33. It trades about -0.04 of its total potential returns per unit of risk. MICROSOFT P 33 is currently generating about -0.15 per unit of volatility. If you would invest  9,912  in MICROSOFT P 33 on September 13, 2024 and sell it today you would lose (319.00) from holding MICROSOFT P 33 or give up 3.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

JD Sports Fashion  vs.  MICROSOFT P 33

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

MICROSOFT P 33

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MICROSOFT P 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 594918BY9 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 594918BY9

The main advantage of trading using opposite JD Sports and 594918BY9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, 594918BY9 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 594918BY9 will offset losses from the drop in 594918BY9's long position.

The idea behind JD Sports Fashion and MICROSOFT P 33 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.