Correlation Between JD Sports and NiSource

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

Diversification Opportunities for JD Sports and NiSource

-0.88

Correlation Coefficient

JD Sports  NiSource

Pay attention - limited upside

The 3 months correlation between JDSPY and NiSource is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource 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 NiSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NiSource has no effect on the direction of JD Sports i.e., JD Sports and NiSource go up and down completely randomly.

Pair Corralation between JD Sports and NiSource

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the NiSource. In addition to that, JD Sports is 4.29 times more volatile than NiSource. It trades about -0.14 of its total potential returns per unit of risk. NiSource is currently generating about 0.14 per unit of volatility. If you would invest  3,380  in NiSource on September 13, 2024 and sell it today you would earn a total of  281.00  from holding NiSource or generate 8.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

JD Sports Fashion  vs.  NiSource

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.

NiSource

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, NiSource may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JD Sports and NiSource

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

The idea behind JD Sports Fashion and NiSource 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.