Correlation Between TRAVEL + and JD SPORTS
Can any of the company-specific risk be diversified away by investing in both TRAVEL + 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 TRAVEL + and JD SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and JD SPORTS FASH, you can compare the effects of market volatilities on TRAVEL + 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 TRAVEL + with a short position of JD SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and JD SPORTS.
Diversification Opportunities for TRAVEL + and JD SPORTS
Modest diversification
The 3 months correlation between TRAVEL and 9JD is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and JD SPORTS FASH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD SPORTS FASH and TRAVEL + 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 TRAVEL LEISURE DL 01 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 FASH has no effect on the direction of TRAVEL + i.e., TRAVEL + and JD SPORTS go up and down completely randomly.
Pair Corralation between TRAVEL + and JD SPORTS
Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to generate 0.62 times more return on investment than JD SPORTS. However, TRAVEL LEISURE DL 01 is 1.63 times less risky than JD SPORTS. It trades about -0.04 of its potential returns per unit of risk. JD SPORTS FASH is currently generating about -0.1 per unit of risk. If you would invest 4,762 in TRAVEL LEISURE DL 01 on December 28, 2024 and sell it today you would lose (282.00) from holding TRAVEL LEISURE DL 01 or give up 5.92% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
TRAVEL LEISURE DL 01 vs. JD SPORTS FASH
Performance |
Timeline |
TRAVEL LEISURE DL |
JD SPORTS FASH |
TRAVEL + and JD SPORTS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TRAVEL + and JD SPORTS
The main advantage of trading using opposite TRAVEL + and JD SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAVEL + 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's long position.TRAVEL + vs. GREENX METALS LTD | TRAVEL + vs. Jupiter Fund Management | TRAVEL + vs. Coor Service Management | TRAVEL + vs. Harmony Gold Mining |
JD SPORTS vs. ELECTRONIC ARTS | JD SPORTS vs. ARROW ELECTRONICS | JD SPORTS vs. STMicroelectronics NV | JD SPORTS vs. Maple Leaf Foods |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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