Correlation Between Xponential Fitness and JD Sports

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

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

Diversification Opportunities for Xponential Fitness and JD Sports

-0.36

Correlation Coefficient

Xponential Fitness  JD Sports

Very good diversification

The 3 months correlation between Xponential and JDDSF is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness i.e., Xponential Fitness and JD Sports go up and down completely randomly.

Pair Corralation between Xponential Fitness and JD Sports

Given the investment horizon of 90 days Xponential Fitness is expected to under-perform the JD Sports. In addition to that, Xponential Fitness is 1.13 times more volatile than JD Sports Fashion. It trades about 0.0 of its total potential returns per unit of risk. JD Sports Fashion is currently generating about 0.03 per unit of volatility. If you would invest  109.00  in JD Sports Fashion on September 28, 2024 and sell it today you would earn a total of  37.00  from holding JD Sports Fashion or generate 33.94% return on investment over 90 days.

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

Xponential Fitness  vs.  JD Sports Fashion

Xponential Fitness

Risk-Adjusted Performance

2 of 100

Weak

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

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 Xponential Fitness and JD Sports

The main advantage of trading using opposite Xponential Fitness and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xponential Fitness 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 Xponential Fitness 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.