Correlation Between JD Sports and Willamette Valley

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

Diversification Opportunities for JD Sports and Willamette Valley

0.75

Correlation Coefficient

JD Sports  Willamette Valley

Poor diversification

The 3 months correlation between JDSPY and Willamette is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley 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 Willamette Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willamette Valley has no effect on the direction of JD Sports i.e., JD Sports and Willamette Valley go up and down completely randomly.

Pair Corralation between JD Sports and Willamette Valley

Assuming the 90 days horizon JD Sports is expected to generate 3.16 times less return on investment than Willamette Valley. In addition to that, JD Sports is 2.71 times more volatile than Willamette Valley Vineyards. It trades about 0.0 of its total potential returns per unit of risk. Willamette Valley Vineyards is currently generating about 0.03 per unit of volatility. If you would invest  331.00  in Willamette Valley Vineyards on September 23, 2024 and sell it today you would earn a total of  2.00  from holding Willamette Valley Vineyards or generate 0.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

JD Sports Fashion  vs.  Willamette Valley Vineyards

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

Willamette Valley

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Willamette Valley Vineyards has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Willamette Valley is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with JD Sports and Willamette Valley

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

The idea behind JD Sports Fashion and Willamette Valley Vineyards 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.