Correlation Between Skandinaviska Enskilda and JD Sports
Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda 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 Skandinaviska Enskilda and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skandinaviska Enskilda Banken and JD Sports Fashion, you can compare the effects of market volatilities on Skandinaviska Enskilda 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 Skandinaviska Enskilda with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and JD Sports.
Diversification Opportunities for Skandinaviska Enskilda and JD Sports
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Skandinaviska and JD Sports is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken 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 Skandinaviska Enskilda 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 Skandinaviska Enskilda Banken 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 Skandinaviska Enskilda i.e., Skandinaviska Enskilda and JD Sports go up and down completely randomly.
Pair Corralation between Skandinaviska Enskilda and JD Sports
Assuming the 90 days trading horizon Skandinaviska Enskilda Banken is expected to generate 0.28 times more return on investment than JD Sports. However, Skandinaviska Enskilda Banken is 3.62 times less risky than JD Sports. It trades about -0.05 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.43 per unit of risk. If you would invest 15,420 in Skandinaviska Enskilda Banken on August 26, 2024 and sell it today you would lose (180.00) from holding Skandinaviska Enskilda Banken or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skandinaviska Enskilda Banken vs. JD Sports Fashion
Performance |
| Timeline |
| Skandinaviska Enskilda |
| JD Sports Fashion |
Skandinaviska Enskilda and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skandinaviska Enskilda and JD Sports
The main advantage of trading using opposite Skandinaviska Enskilda and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda 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.| Skandinaviska Enskilda vs. Samsung Electronics Co | Skandinaviska Enskilda vs. Samsung Electronics Co | Skandinaviska Enskilda vs. Hyundai Motor | Skandinaviska Enskilda vs. Toyota Motor Corp |
| JD Sports vs. Lloyds Banking Group | JD Sports vs. Premier African Minerals | JD Sports vs. SANTANDER UK 8 | JD Sports vs. 88 Energy |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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