Correlation Between Leggett Platt and JD Sports
Can any of the company-specific risk be diversified away by investing in both Leggett Platt 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 Leggett Platt and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leggett Platt and JD Sports Fashion, you can compare the effects of market volatilities on Leggett Platt 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 Leggett Platt with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggett Platt and JD Sports.
Diversification Opportunities for Leggett Platt and JD Sports
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leggett and JD Sports is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Leggett Platt 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 Leggett Platt 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 Leggett Platt 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 Leggett Platt i.e., Leggett Platt and JD Sports go up and down completely randomly.
Pair Corralation between Leggett Platt and JD Sports
Assuming the 90 days trading horizon Leggett Platt is expected to generate 0.7 times more return on investment than JD Sports. However, Leggett Platt is 1.43 times less risky than JD Sports. It trades about 0.31 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.07 per unit of risk. If you would invest 930.00 in Leggett Platt on November 4, 2024 and sell it today you would earn a total of 144.00 from holding Leggett Platt or generate 15.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leggett Platt vs. JD Sports Fashion
Performance |
| Timeline |
| Leggett Platt |
| JD Sports Fashion |
Leggett Platt and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leggett Platt and JD Sports
The main advantage of trading using opposite Leggett Platt and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggett Platt 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.| Leggett Platt vs. Software Circle plc | Leggett Platt vs. Monster Beverage Corp | Leggett Platt vs. Impax Asset Management | Leggett Platt vs. Coor Service Management |
| JD Sports vs. Bytes Technology | JD Sports vs. iShares Physical Silver | JD Sports vs. Spotify Technology SA | JD Sports vs. Auction Technology Group |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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