Correlation Between JD Sports and Proficient Auto

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Can any of the company-specific risk be diversified away by investing in both JD Sports and Proficient Auto 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 Proficient Auto 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 Proficient Auto Logistics,, you can compare the effects of market volatilities on JD Sports and Proficient Auto 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 Proficient Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Proficient Auto.

Diversification Opportunities for JD Sports and Proficient Auto

-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between JDDSF and Proficient is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Proficient Auto Logistics, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proficient Auto Logi 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 Proficient Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proficient Auto Logi has no effect on the direction of JD Sports i.e., JD Sports and Proficient Auto go up and down completely randomly.

Pair Corralation between JD Sports and Proficient Auto

Assuming the 90 days horizon JD Sports Fashion is expected to generate 0.58 times more return on investment than Proficient Auto. However, JD Sports Fashion is 1.73 times less risky than Proficient Auto. It trades about -0.04 of its potential returns per unit of risk. Proficient Auto Logistics, is currently generating about -0.17 per unit of risk. If you would invest  159.00  in JD Sports Fashion on September 5, 2024 and sell it today you would lose (13.00) from holding JD Sports Fashion or give up 8.18% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.44%
ValuesDaily Returns

JD Sports Fashion  vs.  Proficient Auto Logistics,

 Performance 
       Timeline  
JD Sports Fashion 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, JD Sports is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
Proficient Auto Logi 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Proficient Auto Logistics, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

JD Sports and Proficient Auto Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JD Sports and Proficient Auto

The main advantage of trading using opposite JD Sports and Proficient Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Proficient Auto 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 Proficient Auto will offset losses from the drop in Proficient Auto's long position.
The idea behind JD Sports Fashion and Proficient Auto Logistics, 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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