Correlation Between JD SPORTS and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both JD SPORTS and Australian Agricultural 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 Australian Agricultural 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 Australian Agricultural, you can compare the effects of market volatilities on JD SPORTS and Australian Agricultural 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 Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Australian Agricultural.
Diversification Opportunities for JD SPORTS and Australian Agricultural
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 9JD and Australian is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural 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 Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of JD SPORTS i.e., JD SPORTS and Australian Agricultural go up and down completely randomly.
Pair Corralation between JD SPORTS and Australian Agricultural
Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Australian Agricultural. In addition to that, JD SPORTS is 1.83 times more volatile than Australian Agricultural. It trades about -0.37 of its total potential returns per unit of risk. Australian Agricultural is currently generating about 0.01 per unit of volatility. If you would invest 84.00 in Australian Agricultural on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Australian Agricultural or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD SPORTS FASH vs. Australian Agricultural
Performance |
| Timeline |
| JD SPORTS FASH |
| Australian Agricultural |
JD SPORTS and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD SPORTS and Australian Agricultural
The main advantage of trading using opposite JD SPORTS and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural's long position.| JD SPORTS vs. Hochschild Mining plc | JD SPORTS vs. Scientific Games | JD SPORTS vs. QINGCI GAMES INC | JD SPORTS vs. FUTURE GAMING GRP |
| Australian Agricultural vs. Virtus Investment Partners | Australian Agricultural vs. Gladstone Investment | Australian Agricultural vs. EAT WELL INVESTMENT | Australian Agricultural vs. Seven West Media |
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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