Correlation Between JD Sports and FIDELITY

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

Diversification Opportunities for JD Sports and FIDELITY

0.12

Correlation Coefficient

JD Sports  FIDELITY

Average diversification

The 3 months correlation between JDDSF and FIDELITY is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and FIDELITY NATIONAL INFORMATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIDELITY NATIONAL 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 FIDELITY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIDELITY NATIONAL has no effect on the direction of JD Sports i.e., JD Sports and FIDELITY go up and down completely randomly.

Pair Corralation between JD Sports and FIDELITY

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the FIDELITY. In addition to that, JD Sports is 8.41 times more volatile than FIDELITY NATIONAL INFORMATION. It trades about -0.04 of its total potential returns per unit of risk. FIDELITY NATIONAL INFORMATION is currently generating about -0.13 per unit of volatility. If you would invest  9,118  in FIDELITY NATIONAL INFORMATION on September 4, 2024 and sell it today you would lose (216.00) from holding FIDELITY NATIONAL INFORMATION or give up 2.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

JD Sports Fashion  vs.  FIDELITY NATIONAL INFORMATION

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. 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.

FIDELITY NATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FIDELITY NATIONAL INFORMATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FIDELITY is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JD Sports and FIDELITY

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

The idea behind JD Sports Fashion and FIDELITY NATIONAL INFORMATION 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.