Correlation Between JD SPORTS and Anheuser-Busch InBev

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

Diversification Opportunities for JD SPORTS and Anheuser-Busch InBev

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between 9JD and Anheuser-Busch is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Anheuser Busch InBev SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch InBev and JD SPORTS 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 JD SPORTS FASH are associated (or correlated) with Anheuser-Busch InBev. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch InBev has no effect on the direction of JD SPORTS i.e., JD SPORTS and Anheuser-Busch InBev go up and down completely randomly.

Pair Corralation between JD SPORTS and Anheuser-Busch InBev

Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Anheuser-Busch InBev. In addition to that, JD SPORTS is 4.02 times more volatile than Anheuser Busch InBev SANV. It trades about -0.17 of its total potential returns per unit of risk. Anheuser Busch InBev SANV is currently generating about -0.2 per unit of volatility. If you would invest  5,394  in Anheuser Busch InBev SANV on September 5, 2024 and sell it today you would lose (266.00) from holding Anheuser Busch InBev SANV or give up 4.93% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

JD SPORTS FASH  vs.  Anheuser Busch InBev SANV

 Performance 
       Timeline  
JD SPORTS FASH 

Risk-Adjusted Performance

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Over the last 90 days JD SPORTS FASH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Anheuser Busch InBev 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Anheuser Busch InBev SANV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

JD SPORTS and Anheuser-Busch InBev Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JD SPORTS and Anheuser-Busch InBev

The main advantage of trading using opposite JD SPORTS and Anheuser-Busch InBev positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, Anheuser-Busch InBev 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 Anheuser-Busch InBev will offset losses from the drop in Anheuser-Busch InBev's long position.
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The idea behind JD SPORTS FASH and Anheuser Busch InBev SANV 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.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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