Correlation Between SoftBank Group and JD Sports
Can any of the company-specific risk be diversified away by investing in both SoftBank Group 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 SoftBank Group and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoftBank Group Corp and JD Sports Fashion, you can compare the effects of market volatilities on SoftBank Group 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 SoftBank Group with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and JD Sports.
Diversification Opportunities for SoftBank Group and JD Sports
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SoftBank and JD Sports is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group 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 SoftBank Group 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 SoftBank Group 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 SoftBank Group i.e., SoftBank Group and JD Sports go up and down completely randomly.
Pair Corralation between SoftBank Group and JD Sports
Assuming the 90 days trading horizon SoftBank Group Corp is expected to generate 0.53 times more return on investment than JD Sports. However, SoftBank Group Corp is 1.88 times less risky than JD Sports. It trades about -0.17 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.26 per unit of risk. If you would invest 950,000 in SoftBank Group Corp on August 28, 2024 and sell it today you would lose (62,600) from holding SoftBank Group Corp or give up 6.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
SoftBank Group Corp vs. JD Sports Fashion
Performance |
| Timeline |
| SoftBank Group Corp |
| JD Sports Fashion |
SoftBank Group and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and JD Sports
The main advantage of trading using opposite SoftBank Group and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group 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.| SoftBank Group vs. Toyota Motor Corp | SoftBank Group vs. OTP Bank Nyrt | SoftBank Group vs. Yum Brands | SoftBank Group vs. Cognizant Technology Solutions |
| JD Sports vs. Universal Display Corp | JD Sports vs. Gamma Communications PLC | JD Sports vs. Leroy Seafood Group | JD Sports vs. Batm Advanced Communications |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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