Correlation Between JD Sports and Falcons Beyond

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

Diversification Opportunities for JD Sports and Falcons Beyond

-0.5

Correlation Coefficient

JD Sports  Falcons Beyond

Very good diversification

The 3 months correlation between JDSPY and Falcons is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Falcons Beyond Global, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcons Beyond Global, 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 Falcons Beyond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcons Beyond Global, has no effect on the direction of JD Sports i.e., JD Sports and Falcons Beyond go up and down completely randomly.

Pair Corralation between JD Sports and Falcons Beyond

Assuming the 90 days horizon JD Sports Fashion is expected to generate 0.48 times more return on investment than Falcons Beyond. However, JD Sports Fashion is 2.08 times less risky than Falcons Beyond. It trades about -0.08 of its potential returns per unit of risk. Falcons Beyond Global, is currently generating about -1.17 per unit of risk. If you would invest  115.00  in JD Sports Fashion on October 23, 2024 and sell it today you would lose (10.00) from holding JD Sports Fashion or give up 8.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	50.0%
Values	Daily Returns

JD Sports Fashion  vs.  Falcons Beyond Global,

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. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Falcons Beyond Global,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcons Beyond Global, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with JD Sports and Falcons Beyond

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

The idea behind JD Sports Fashion and Falcons Beyond Global, 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 Stocks Directory module to find actively traded stocks across global markets.