Correlation Between Freeport and JD Sports

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

By analyzing existing cross correlation between Freeport McMoRan 4125 percent and JD Sports Fashion, you can compare the effects of market volatilities on Freeport 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 Freeport with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport and JD Sports.

Diversification Opportunities for Freeport and JD Sports

0.67

Correlation Coefficient

Freeport  JD Sports

Poor diversification

The 3 months correlation between Freeport and JDSPY is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan 4125 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 Freeport 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 Freeport McMoRan 4125 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 Freeport i.e., Freeport and JD Sports go up and down completely randomly.

Pair Corralation between Freeport and JD Sports

Assuming the 90 days trading horizon Freeport McMoRan 4125 percent is expected to generate 0.37 times more return on investment than JD Sports. However, Freeport McMoRan 4125 percent is 2.7 times less risky than JD Sports. It trades about -0.23 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.2 per unit of risk. If you would invest  9,748  in Freeport McMoRan 4125 percent on September 26, 2024 and sell it today you would lose (433.00) from holding Freeport McMoRan 4125 percent or give up 4.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Freeport McMoRan 4125 percent  vs.  JD Sports Fashion

Freeport McMoRan 4125

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeport McMoRan 4125 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Freeport 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. 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.

Pair Trading with Freeport and JD Sports

The main advantage of trading using opposite Freeport and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport 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 Freeport McMoRan 4125 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.