Correlation Between JD Sports and Zinc Media
Can any of the company-specific risk be diversified away by investing in both JD Sports and Zinc Media 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 Zinc Media 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 Zinc Media Group, you can compare the effects of market volatilities on JD Sports and Zinc Media 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 Zinc Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Zinc Media.
Diversification Opportunities for JD Sports and Zinc Media
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JD Sports and Zinc is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Zinc Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinc Media Group 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 Zinc Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinc Media Group has no effect on the direction of JD Sports i.e., JD Sports and Zinc Media go up and down completely randomly.
Pair Corralation between JD Sports and Zinc Media
Assuming the 90 days trading horizon JD Sports Fashion is expected to generate 1.38 times more return on investment than Zinc Media. However, JD Sports is 1.38 times more volatile than Zinc Media Group. It trades about -0.13 of its potential returns per unit of risk. Zinc Media Group is currently generating about -0.24 per unit of risk. If you would invest 11,965 in JD Sports Fashion on September 10, 2024 and sell it today you would lose (1,500) from holding JD Sports Fashion or give up 12.54% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
JD Sports Fashion vs. Zinc Media Group
Performance |
Timeline |
JD Sports Fashion |
Zinc Media Group |
JD Sports and Zinc Media Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JD Sports and Zinc Media
The main advantage of trading using opposite JD Sports and Zinc Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Zinc Media 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 Zinc Media will offset losses from the drop in Zinc Media's long position.JD Sports vs. Samsung Electronics Co | JD Sports vs. Samsung Electronics Co | JD Sports vs. Hyundai Motor | JD Sports vs. Toyota Motor Corp |
Zinc Media vs. Samsung Electronics Co | Zinc Media vs. Samsung Electronics Co | Zinc Media vs. Hyundai Motor | Zinc Media vs. Toyota Motor Corp |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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