Correlation Between PHINIA and JD Sports

Can any of the company-specific risk be diversified away by investing in both PHINIA and JD Sports 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 PHINIA and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PHINIA Inc and JD Sports Fashion, you can compare the effects of market volatilities on PHINIA and JD Sports 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 PHINIA with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHINIA and JD Sports.

Diversification Opportunities for PHINIA and JD Sports

-0.43

Correlation Coefficient

PHINIA  JD Sports

Very good diversification

The 3 months correlation between PHINIA and JDDSF is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PHINIA Inc and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion and PHINIA 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 PHINIA Inc are associated (or correlated) with JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of PHINIA i.e., PHINIA and JD Sports go up and down completely randomly.

Pair Corralation between PHINIA and JD Sports

Given the investment horizon of 90 days PHINIA Inc is expected to generate 0.87 times more return on investment than JD Sports. However, PHINIA Inc is 1.15 times less risky than JD Sports. It trades about 0.11 of its potential returns per unit of risk. JD Sports Fashion is currently generating about 0.03 per unit of risk. If you would invest  2,814  in PHINIA Inc on October 9, 2024 and sell it today you would earn a total of  1,900  from holding PHINIA Inc or generate 67.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PHINIA Inc  vs.  JD Sports Fashion

PHINIA Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PHINIA Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent forward indicators, PHINIA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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. Despite nearly stable basic indicators, JD Sports is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PHINIA and JD Sports

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

The idea behind PHINIA Inc and JD Sports Fashion 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.