Correlation Between JD SPORTS and ASHFORD HOSPITTRUST

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

By analyzing existing cross correlation between JD SPORTS FASH and ASHFORD HOSPITTRUST, you can compare the effects of market volatilities on JD SPORTS and ASHFORD HOSPITTRUST 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 ASHFORD HOSPITTRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and ASHFORD HOSPITTRUST.

Diversification Opportunities for JD SPORTS and ASHFORD HOSPITTRUST

0.7

Correlation Coefficient

JD SPORTS  ASHFORD HOSPITTRUST

Poor diversification

The 3 months correlation between 9JD and ASHFORD is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and ASHFORD HOSPITTRUST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASHFORD HOSPITTRUST 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 FASH are associated (or correlated) with ASHFORD HOSPITTRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASHFORD HOSPITTRUST has no effect on the direction of JD SPORTS i.e., JD SPORTS and ASHFORD HOSPITTRUST go up and down completely randomly.

Pair Corralation between JD SPORTS and ASHFORD HOSPITTRUST

Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the ASHFORD HOSPITTRUST. In addition to that, JD SPORTS is 1.31 times more volatile than ASHFORD HOSPITTRUST. It trades about -0.26 of its total potential returns per unit of risk. ASHFORD HOSPITTRUST is currently generating about -0.16 per unit of volatility. If you would invest  640.00  in ASHFORD HOSPITTRUST on September 30, 2024 and sell it today you would lose (135.00) from holding ASHFORD HOSPITTRUST or give up 21.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

JD SPORTS FASH  vs.  ASHFORD HOSPITTRUST

JD SPORTS FASH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD SPORTS FASH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ASHFORD HOSPITTRUST

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASHFORD HOSPITTRUST has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with JD SPORTS and ASHFORD HOSPITTRUST

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

The idea behind JD SPORTS FASH and ASHFORD HOSPITTRUST 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.