Correlation Between JD SPORTS and Adidas AG
Can any of the company-specific risk be diversified away by investing in both JD SPORTS and Adidas AG 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 Adidas AG 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 adidas AG, you can compare the effects of market volatilities on JD SPORTS and Adidas AG 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 Adidas AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Adidas AG.
Diversification Opportunities for JD SPORTS and Adidas AG
Excellent diversification
The 3 months correlation between 9JD and Adidas is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and adidas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on adidas AG 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 Adidas AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of adidas AG has no effect on the direction of JD SPORTS i.e., JD SPORTS and Adidas AG go up and down completely randomly.
Pair Corralation between JD SPORTS and Adidas AG
Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Adidas AG. In addition to that, JD SPORTS is 1.53 times more volatile than adidas AG. It trades about -0.03 of its total potential returns per unit of risk. adidas AG is currently generating about 0.07 per unit of volatility. If you would invest 6,895 in adidas AG on November 6, 2024 and sell it today you would earn a total of 5,605 from holding adidas AG or generate 81.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD SPORTS FASH vs. adidas AG
Performance |
| Timeline |
| JD SPORTS FASH |
| adidas AG |
JD SPORTS and Adidas AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD SPORTS and Adidas AG
The main advantage of trading using opposite JD SPORTS and Adidas AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, Adidas AG 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 Adidas AG will offset losses from the drop in Adidas AG's long position.| JD SPORTS vs. Eurasia Mining Plc | JD SPORTS vs. Endeavour Mining PLC | JD SPORTS vs. MUTUIONLINE | JD SPORTS vs. Yanzhou Coal Mining |
| Adidas AG vs. Ares Management Corp | Adidas AG vs. WESANA HEALTH HOLD | Adidas AG vs. Planet Fitness | Adidas AG vs. Transport International Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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