Correlation Between JD Sports and Western Midstream

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

Diversification Opportunities for JD Sports and Western Midstream

-0.7

Correlation Coefficient

JD Sports  Western Midstream

Excellent diversification

The 3 months correlation between JDDSF and Western is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Western Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Midstream 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 Western Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Midstream has no effect on the direction of JD Sports i.e., JD Sports and Western Midstream go up and down completely randomly.

Pair Corralation between JD Sports and Western Midstream

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Western Midstream. In addition to that, JD Sports is 1.72 times more volatile than Western Midstream Partners. It trades about -0.17 of its total potential returns per unit of risk. Western Midstream Partners is currently generating about 0.1 per unit of volatility. If you would invest  3,802  in Western Midstream Partners on December 28, 2024 and sell it today you would earn a total of  345.00  from holding Western Midstream Partners or generate 9.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

JD Sports Fashion  vs.  Western Midstream Partners

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 conflicting 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.

Western Midstream

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Midstream Partners are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Western Midstream may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with JD Sports and Western Midstream

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

The idea behind JD Sports Fashion and Western Midstream Partners 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.