Correlation Between CoreCivic and JD Sports

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

By analyzing existing cross correlation between CoreCivic 475 percent and JD Sports Fashion, you can compare the effects of market volatilities on CoreCivic 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 CoreCivic with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of CoreCivic and JD Sports.

Diversification Opportunities for CoreCivic and JD Sports

0.54

Correlation Coefficient

CoreCivic  JD Sports

Very weak diversification

The 3 months correlation between CoreCivic and JDDSF is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding CoreCivic 475 percent 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 CoreCivic 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 CoreCivic 475 percent 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 CoreCivic i.e., CoreCivic and JD Sports go up and down completely randomly.

Pair Corralation between CoreCivic and JD Sports

Assuming the 90 days trading horizon CoreCivic 475 percent is expected to generate 0.4 times more return on investment than JD Sports. However, CoreCivic 475 percent is 2.49 times less risky than JD Sports. It trades about 0.0 of its potential returns per unit of risk. JD Sports Fashion is currently generating about 0.0 per unit of risk. If you would invest  9,058  in CoreCivic 475 percent on September 15, 2024 and sell it today you would lose (76.00) from holding CoreCivic 475 percent or give up 0.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.88%
Values	Daily Returns

CoreCivic 475 percent  vs.  JD Sports Fashion

CoreCivic 475 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CoreCivic 475 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CoreCivic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CoreCivic and JD Sports

The main advantage of trading using opposite CoreCivic and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CoreCivic 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 CoreCivic 475 percent 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.