Correlation Between Catena Media and JD Sports
Can any of the company-specific risk be diversified away by investing in both Catena 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 Catena 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 Catena Media PLC and JD Sports Fashion, you can compare the effects of market volatilities on Catena 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 Catena Media with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and JD Sports.
Diversification Opportunities for Catena Media and JD Sports
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Catena and JD Sports is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media PLC 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 Catena 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 Catena Media PLC 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 Catena Media i.e., Catena Media and JD Sports go up and down completely randomly.
Pair Corralation between Catena Media and JD Sports
Assuming the 90 days trading horizon Catena Media PLC is expected to generate 0.88 times more return on investment than JD Sports. However, Catena Media PLC is 1.13 times less risky than JD Sports. It trades about -0.24 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.23 per unit of risk. If you would invest 521.00 in Catena Media PLC on August 30, 2024 and sell it today you would lose (97.00) from holding Catena Media PLC or give up 18.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catena Media PLC vs. JD Sports Fashion
Performance |
| Timeline |
| Catena Media PLC |
| JD Sports Fashion |
Catena Media and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catena Media and JD Sports
The main advantage of trading using opposite Catena Media and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena 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.| Catena Media vs. Lendinvest PLC | Catena Media vs. Neometals | Catena Media vs. Albion Technology General | Catena Media vs. Jupiter Fund Management |
| JD Sports vs. Ondine Biomedical | JD Sports vs. Europa Metals | JD Sports vs. Lendinvest PLC | JD Sports vs. Neometals |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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