Correlation Between Vail Resorts and JD

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

By analyzing existing cross correlation between Vail Resorts and JD Inc Adr, you can compare the effects of market volatilities on Vail Resorts and JD 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 Vail Resorts with a short position of JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vail Resorts and JD.

Diversification Opportunities for Vail Resorts and JD

-0.4

Correlation Coefficient

Vail Resorts  JD

Very good diversification

The 3 months correlation between Vail and JD is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Vail Resorts and JD Inc Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc Adr and Vail Resorts 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 Vail Resorts are associated (or correlated) with JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc Adr has no effect on the direction of Vail Resorts i.e., Vail Resorts and JD go up and down completely randomly.

Pair Corralation between Vail Resorts and JD

Assuming the 90 days horizon Vail Resorts is expected to generate 0.61 times more return on investment than JD. However, Vail Resorts is 1.65 times less risky than JD. It trades about 0.16 of its potential returns per unit of risk. JD Inc Adr is currently generating about -0.06 per unit of risk. If you would invest  15,400  in Vail Resorts on September 26, 2024 and sell it today you would earn a total of  2,100  from holding Vail Resorts or generate 13.64% return on investment over 90 days.

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

Vail Resorts  vs.  JD Inc Adr

Vail Resorts

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vail Resorts are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vail Resorts may actually be approaching a critical reversion point that can send shares even higher in January 2025.

JD Inc Adr

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc Adr are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, JD may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vail Resorts and JD

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

The idea behind Vail Resorts and JD Inc Adr 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.