Correlation Between JD Sports and Futura Medical

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

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

Diversification Opportunities for JD Sports and Futura Medical

0.27

Correlation Coefficient

JD Sports  Futura Medical

Modest diversification

The 3 months correlation between JD Sports and Futura is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Futura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futura Medical 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 Fashion are associated (or correlated) with Futura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futura Medical has no effect on the direction of JD Sports i.e., JD Sports and Futura Medical go up and down completely randomly.

Pair Corralation between JD Sports and Futura Medical

Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Futura Medical. In addition to that, JD Sports is 1.08 times more volatile than Futura Medical. It trades about -0.24 of its total potential returns per unit of risk. Futura Medical is currently generating about -0.04 per unit of volatility. If you would invest  3,550  in Futura Medical on September 21, 2024 and sell it today you would lose (275.00) from holding Futura Medical or give up 7.75% of portfolio value over 90 days.

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

JD Sports Fashion  vs.  Futura Medical

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 uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Futura Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Futura Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Futura Medical is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JD Sports and Futura Medical

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

The idea behind JD Sports Fashion and Futura Medical 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.