Correlation Between JD SPORTS and Applied Materials
Can any of the company-specific risk be diversified away by investing in both JD SPORTS and Applied Materials 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 Applied Materials 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 Applied Materials, you can compare the effects of market volatilities on JD SPORTS and Applied Materials 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 Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Applied Materials.
Diversification Opportunities for JD SPORTS and Applied Materials
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 9JD and Applied is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials 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 Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of JD SPORTS i.e., JD SPORTS and Applied Materials go up and down completely randomly.
Pair Corralation between JD SPORTS and Applied Materials
Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Applied Materials. In addition to that, JD SPORTS is 1.77 times more volatile than Applied Materials. It trades about -0.16 of its total potential returns per unit of risk. Applied Materials is currently generating about 0.46 per unit of volatility. If you would invest 15,844 in Applied Materials on October 25, 2024 and sell it today you would earn a total of 3,304 from holding Applied Materials or generate 20.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD SPORTS FASH vs. Applied Materials
Performance |
| Timeline |
| JD SPORTS FASH |
| Applied Materials |
JD SPORTS and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD SPORTS and Applied Materials
The main advantage of trading using opposite JD SPORTS and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| JD SPORTS vs. Japan Asia Investment | JD SPORTS vs. Retail Estates NV | JD SPORTS vs. AOYAMA TRADING | JD SPORTS vs. PICKN PAY STORES |
| Applied Materials vs. ASML Holding NV | Applied Materials vs. KLA Corporation | Applied Materials vs. Teradyne | Applied Materials vs. ASM International NV |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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