Correlation Between JD Sports and Afterpay

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

Diversification Opportunities for JD Sports and Afterpay

0.0

Correlation Coefficient

JD Sports  Afterpay

Pay attention - limited upside

The 3 months correlation between JDSPY and Afterpay is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Afterpay Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afterpay Limited 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 Afterpay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afterpay Limited has no effect on the direction of JD Sports i.e., JD Sports and Afterpay go up and down completely randomly.

Pair Corralation between JD Sports and Afterpay

If you would invest  158.00  in JD Sports Fashion on September 29, 2024 and sell it today you would lose (47.00) from holding JD Sports Fashion or give up 29.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

JD Sports Fashion  vs.  Afterpay Limited

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 conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Afterpay Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Afterpay Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Afterpay is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JD Sports and Afterpay

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

The idea behind JD Sports Fashion and Afterpay Limited 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 Stocks Directory module to find actively traded stocks across global markets.