Correlation Between Zinc Media and JD Sports
Can any of the company-specific risk be diversified away by investing in both Zinc Media 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 Zinc Media and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zinc Media Group and JD Sports Fashion, you can compare the effects of market volatilities on Zinc Media 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 Zinc Media with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zinc Media and JD Sports.
Diversification Opportunities for Zinc Media and JD Sports
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zinc and JD Sports is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Zinc Media Group 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 Zinc Media 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 Zinc Media Group 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 Zinc Media i.e., Zinc Media and JD Sports go up and down completely randomly.
Pair Corralation between Zinc Media and JD Sports
Assuming the 90 days trading horizon Zinc Media Group is expected to under-perform the JD Sports. But the stock apears to be less risky and, when comparing its historical volatility, Zinc Media Group is 1.22 times less risky than JD Sports. The stock trades about -0.04 of its potential returns per unit of risk. The JD Sports Fashion is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 11,647 in JD Sports Fashion on September 6, 2024 and sell it today you would lose (1,377) from holding JD Sports Fashion or give up 11.82% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 97.8% |
Values | Daily Returns |
Zinc Media Group vs. JD Sports Fashion
Performance |
Timeline |
Zinc Media Group |
JD Sports Fashion |
Zinc Media and JD Sports Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Zinc Media and JD Sports
The main advantage of trading using opposite Zinc Media and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zinc Media 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.Zinc Media vs. EVS Broadcast Equipment | Zinc Media vs. Bellevue Healthcare Trust | Zinc Media vs. Eco Animal Health | Zinc Media vs. United Airlines Holdings |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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