Correlation Between Public Service and JD Sports
Can any of the company-specific risk be diversified away by investing in both Public Service 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 Public Service and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Service Enterprise and JD Sports Fashion, you can compare the effects of market volatilities on Public Service 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 Public Service with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Service and JD Sports.
Diversification Opportunities for Public Service and JD Sports
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Public and JD Sports is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Public Service Enterprise 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 Public Service 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 Public Service Enterprise 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 Public Service i.e., Public Service and JD Sports go up and down completely randomly.
Pair Corralation between Public Service and JD Sports
Assuming the 90 days trading horizon Public Service Enterprise is expected to generate 0.46 times more return on investment than JD Sports. However, Public Service Enterprise is 2.19 times less risky than JD Sports. It trades about 0.07 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.04 per unit of risk. If you would invest 5,710 in Public Service Enterprise on November 6, 2024 and sell it today you would earn a total of 2,595 from holding Public Service Enterprise or generate 45.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.98% |
| Values | Daily Returns |
Public Service Enterprise vs. JD Sports Fashion
Performance |
| Timeline |
| Public Service Enterprise |
| JD Sports Fashion |
Public Service and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Service and JD Sports
The main advantage of trading using opposite Public Service and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Service 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.| Public Service vs. FC Investment Trust | Public Service vs. Seraphim Space Investment | Public Service vs. Edinburgh Investment Trust | Public Service vs. BlackRock Frontiers Investment |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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