Correlation Between JD Sports and IB Acquisition
Can any of the company-specific risk be diversified away by investing in both JD Sports and IB Acquisition 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 IB Acquisition 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 IB Acquisition Corp, you can compare the effects of market volatilities on JD Sports and IB Acquisition 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 IB Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and IB Acquisition.
Diversification Opportunities for JD Sports and IB Acquisition
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JDSPY and IBAC is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and IB Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IB Acquisition Corp 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 IB Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IB Acquisition Corp has no effect on the direction of JD Sports i.e., JD Sports and IB Acquisition go up and down completely randomly.
Pair Corralation between JD Sports and IB Acquisition
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the IB Acquisition. In addition to that, JD Sports is 13.91 times more volatile than IB Acquisition Corp. It trades about -0.17 of its total potential returns per unit of risk. IB Acquisition Corp is currently generating about 0.07 per unit of volatility. If you would invest 1,023 in IB Acquisition Corp on December 5, 2024 and sell it today you would earn a total of 2.00 from holding IB Acquisition Corp or generate 0.2% 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. IB Acquisition Corp
Performance |
Timeline |
JD Sports Fashion |
IB Acquisition Corp |
JD Sports and IB Acquisition Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JD Sports and IB Acquisition
The main advantage of trading using opposite JD Sports and IB Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, IB Acquisition 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 IB Acquisition will offset losses from the drop in IB Acquisition's long position.JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
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Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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