Correlation Between JD Sports and 8426EPAD0

Can any of the company-specific risk be diversified away by investing in both JD Sports and 8426EPAD0 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 8426EPAD0 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 US8426EPAD09, you can compare the effects of market volatilities on JD Sports and 8426EPAD0 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 8426EPAD0. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and 8426EPAD0.

Diversification Opportunities for JD Sports and 8426EPAD0

0.42

Correlation Coefficient

JD Sports  8426EPAD0

Very weak diversification

The 3 months correlation between JDDSF and 8426EPAD0 is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and US8426EPAD09 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US8426EPAD09 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 8426EPAD0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US8426EPAD09 has no effect on the direction of JD Sports i.e., JD Sports and 8426EPAD0 go up and down completely randomly.

Pair Corralation between JD Sports and 8426EPAD0

Assuming the 90 days horizon JD Sports Fashion is expected to generate 3.91 times more return on investment than 8426EPAD0. However, JD Sports is 3.91 times more volatile than US8426EPAD09. It trades about -0.04 of its potential returns per unit of risk. US8426EPAD09 is currently generating about -0.18 per unit of risk. If you would invest  159.00  in JD Sports Fashion on October 8, 2024 and sell it today you would lose (13.00) from holding JD Sports Fashion or give up 8.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	75.81%
Values	Daily Returns

JD Sports Fashion  vs.  US8426EPAD09

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.

US8426EPAD09

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US8426EPAD09 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Bond's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for US8426EPAD09 shareholders.

Pair Trading with JD Sports and 8426EPAD0

The main advantage of trading using opposite JD Sports and 8426EPAD0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, 8426EPAD0 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 8426EPAD0 will offset losses from the drop in 8426EPAD0's long position.

The idea behind JD Sports Fashion and US8426EPAD09 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.