Correlation Between JD Sports and OmniAb

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

Diversification Opportunities for JD Sports and OmniAb

0.08

Correlation Coefficient

JD Sports  OmniAb

Significant diversification

The 3 months correlation between JDSPY and OmniAb is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and OmniAb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OmniAb Inc 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 OmniAb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OmniAb Inc has no effect on the direction of JD Sports i.e., JD Sports and OmniAb go up and down completely randomly.

Pair Corralation between JD Sports and OmniAb

Assuming the 90 days horizon JD Sports is expected to generate 1491.69 times less return on investment than OmniAb. But when comparing it to its historical volatility, JD Sports Fashion is 23.94 times less risky than OmniAb. It trades about 0.0 of its potential returns per unit of risk. OmniAb Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  58.00  in OmniAb Inc on October 11, 2024 and sell it today you would lose (26.00) from holding OmniAb Inc or give up 44.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	74.4%
Values	Daily Returns

JD Sports Fashion  vs.  OmniAb Inc

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.

OmniAb Inc

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days OmniAb Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak forward indicators, OmniAb showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD Sports and OmniAb

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

The idea behind JD Sports Fashion and OmniAb Inc 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.