Correlation Between Liberty Media and JD Sports
Can any of the company-specific risk be diversified away by investing in both Liberty 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 Liberty 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 Liberty Media Corp and JD Sports Fashion, you can compare the effects of market volatilities on Liberty 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 Liberty Media with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and JD Sports.
Diversification Opportunities for Liberty Media and JD Sports
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Liberty and JD Sports is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media Corp 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 Liberty 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 Liberty Media Corp 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 Liberty Media i.e., Liberty Media and JD Sports go up and down completely randomly.
Pair Corralation between Liberty Media and JD Sports
Assuming the 90 days trading horizon Liberty Media Corp is expected to generate 0.46 times more return on investment than JD Sports. However, Liberty Media Corp is 2.17 times less risky than JD Sports. It trades about 0.19 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.18 per unit of risk. If you would invest 7,454 in Liberty Media Corp on September 4, 2024 and sell it today you would earn a total of 601.00 from holding Liberty Media Corp or generate 8.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Media Corp vs. JD Sports Fashion
Performance |
| Timeline |
| Liberty Media Corp |
| JD Sports Fashion |
Liberty Media and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Media and JD Sports
The main advantage of trading using opposite Liberty Media and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty 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.| Liberty Media vs. Teradata Corp | Liberty Media vs. Aeorema Communications Plc | Liberty Media vs. Charter Communications Cl | Liberty Media vs. Austevoll Seafood ASA |
| JD Sports vs. Check Point Software | JD Sports vs. Microchip Technology | JD Sports vs. Roper Technologies | JD Sports vs. Raytheon Technologies Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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