Correlation Between JD SPORTS and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both JD SPORTS and Sumitomo Mitsui 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 Sumitomo Mitsui 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 Sumitomo Mitsui Construction, you can compare the effects of market volatilities on JD SPORTS and Sumitomo Mitsui 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 Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Sumitomo Mitsui.
Diversification Opportunities for JD SPORTS and Sumitomo Mitsui
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 9JD and Sumitomo is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Sumitomo Mitsui Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Cons 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 Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Cons has no effect on the direction of JD SPORTS i.e., JD SPORTS and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between JD SPORTS and Sumitomo Mitsui
Assuming the 90 days horizon JD SPORTS FASH is expected to generate 2.92 times more return on investment than Sumitomo Mitsui. However, JD SPORTS is 2.92 times more volatile than Sumitomo Mitsui Construction. It trades about -0.02 of its potential returns per unit of risk. Sumitomo Mitsui Construction is currently generating about -0.07 per unit of risk. If you would invest 118.00 in JD SPORTS FASH on October 17, 2024 and sell it today you would lose (5.00) from holding JD SPORTS FASH or give up 4.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD SPORTS FASH vs. Sumitomo Mitsui Construction
Performance |
| Timeline |
| JD SPORTS FASH |
| Sumitomo Mitsui Cons |
JD SPORTS and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD SPORTS and Sumitomo Mitsui
The main advantage of trading using opposite JD SPORTS and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| JD SPORTS vs. Endeavour Mining PLC | JD SPORTS vs. Yanzhou Coal Mining | JD SPORTS vs. 24SEVENOFFICE GROUP AB | JD SPORTS vs. ARDAGH METAL PACDL 0001 |
| Sumitomo Mitsui vs. InPlay Oil Corp | Sumitomo Mitsui vs. Nippon Light Metal | Sumitomo Mitsui vs. ANTA SPORTS PRODUCT | Sumitomo Mitsui vs. JD SPORTS FASH |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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