Correlation Between JD Sports and Uber Technologies

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

Diversification Opportunities for JD Sports and Uber Technologies

-0.64

Correlation Coefficient

JD Sports  Uber Technologies

Excellent diversification

The 3 months correlation between JDSPY and Uber is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of JD Sports i.e., JD Sports and Uber Technologies go up and down completely randomly.

Pair Corralation between JD Sports and Uber Technologies

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Uber Technologies. In addition to that, JD Sports is 1.25 times more volatile than Uber Technologies. It trades about -0.1 of its total potential returns per unit of risk. Uber Technologies is currently generating about 0.14 per unit of volatility. If you would invest  6,113  in Uber Technologies on December 27, 2024 and sell it today you would earn a total of  1,373  from holding Uber Technologies or generate 22.46% 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.  Uber Technologies

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. 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Uber Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Uber Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD Sports and Uber Technologies

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

The idea behind JD Sports Fashion and Uber Technologies 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.