Correlation Between 78490FA58 and JD Sports

Can any of the company-specific risk be diversified away by investing in both 78490FA58 and JD Sports 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 78490FA58 and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US78490FA587 and JD Sports Fashion, you can compare the effects of market volatilities on 78490FA58 and JD Sports 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 78490FA58 with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of 78490FA58 and JD Sports.

Diversification Opportunities for 78490FA58 and JD Sports

-0.57

Correlation Coefficient

78490FA58  JD Sports

Excellent diversification

The 3 months correlation between 78490FA58 and JDDSF is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding US78490FA587 and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion and 78490FA58 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 US78490FA587 are associated (or correlated) with JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of 78490FA58 i.e., 78490FA58 and JD Sports go up and down completely randomly.

Pair Corralation between 78490FA58 and JD Sports

Assuming the 90 days trading horizon US78490FA587 is expected to generate 1.47 times more return on investment than JD Sports. However, 78490FA58 is 1.47 times more volatile than JD Sports Fashion. It trades about 0.15 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.04 per unit of risk. If you would invest  8,100  in US78490FA587 on September 30, 2024 and sell it today you would earn a total of  779.00  from holding US78490FA587 or generate 9.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	28.13%
Values	Daily Returns

US78490FA587  vs.  JD Sports Fashion

US78490FA587

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US78490FA587 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, 78490FA58 sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with 78490FA58 and JD Sports

The main advantage of trading using opposite 78490FA58 and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 78490FA58 position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.

The idea behind US78490FA587 and JD Sports Fashion 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.