Correlation Between Air Products and JD Sports
Can any of the company-specific risk be diversified away by investing in both Air Products 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 Air Products and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products Chemicals and JD Sports Fashion, you can compare the effects of market volatilities on Air Products 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 Air Products with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and JD Sports.
Diversification Opportunities for Air Products and JD Sports
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and JD Sports is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals 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 Air Products 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 Air Products Chemicals 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 Air Products i.e., Air Products and JD Sports go up and down completely randomly.
Pair Corralation between Air Products and JD Sports
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 0.34 times more return on investment than JD Sports. However, Air Products Chemicals is 2.91 times less risky than JD Sports. It trades about 0.12 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.44 per unit of risk. If you would invest 32,127 in Air Products Chemicals on August 25, 2024 and sell it today you would earn a total of 944.00 from holding Air Products Chemicals or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products Chemicals vs. JD Sports Fashion
Performance |
| Timeline |
| Air Products Chemicals |
| JD Sports Fashion |
Air Products and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and JD Sports
The main advantage of trading using opposite Air Products and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products 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.| Air Products vs. Quadrise Plc | Air Products vs. Intuitive Investments Group | Air Products vs. European Metals Holdings | Air Products vs. Athelney Trust plc |
| JD Sports vs. Toyota Motor Corp | JD Sports vs. SoftBank Group Corp | JD Sports vs. State Bank of | JD Sports vs. Freddie Mac |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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