Correlation Between Vienna Insurance and JD Sports

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Can any of the company-specific risk be diversified away by investing in both Vienna Insurance 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 Vienna Insurance and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vienna Insurance Group and JD Sports Fashion, you can compare the effects of market volatilities on Vienna Insurance 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 Vienna Insurance with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vienna Insurance and JD Sports.

Diversification Opportunities for Vienna Insurance and JD Sports

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Vienna and JD Sports is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vienna Insurance Group 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 Vienna Insurance 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 Vienna Insurance Group 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 Vienna Insurance i.e., Vienna Insurance and JD Sports go up and down completely randomly.

Pair Corralation between Vienna Insurance and JD Sports

Assuming the 90 days trading horizon Vienna Insurance Group is expected to generate 0.25 times more return on investment than JD Sports. However, Vienna Insurance Group is 4.04 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 -0.2 per unit of risk. If you would invest  2,955  in Vienna Insurance Group on August 31, 2024 and sell it today you would lose (37.00) from holding Vienna Insurance Group or give up 1.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Vienna Insurance Group  vs.  JD Sports Fashion

 Performance 
       Timeline  
Vienna Insurance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Vienna Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JD Sports Fashion 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Vienna Insurance and JD Sports Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vienna Insurance and JD Sports

The main advantage of trading using opposite Vienna Insurance and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vienna Insurance 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.
The idea behind Vienna Insurance Group and JD Sports Fashion pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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