Correlation Between JD SPORTS and Air New
Can any of the company-specific risk be diversified away by investing in both JD SPORTS and Air New 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 Air New 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 Air New Zealand, you can compare the effects of market volatilities on JD SPORTS and Air New 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 Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Air New.
Diversification Opportunities for JD SPORTS and Air New
Very good diversification
The 3 months correlation between 9JD and Air is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand 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 Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of JD SPORTS i.e., JD SPORTS and Air New go up and down completely randomly.
Pair Corralation between JD SPORTS and Air New
Assuming the 90 days horizon JD SPORTS FASH is expected to generate 0.81 times more return on investment than Air New. However, JD SPORTS FASH is 1.23 times less risky than Air New. It trades about 0.08 of its potential returns per unit of risk. Air New Zealand is currently generating about 0.06 per unit of risk. If you would invest 111.00 in JD SPORTS FASH on September 24, 2024 and sell it today you would earn a total of 4.00 from holding JD SPORTS FASH or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
JD SPORTS FASH vs. Air New Zealand
Performance |
| Timeline |
| JD SPORTS FASH |
| Air New Zealand |
JD SPORTS and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD SPORTS and Air New
The main advantage of trading using opposite JD SPORTS and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, Air New 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 Air New will offset losses from the drop in Air New's long position.| JD SPORTS vs. Regal Hotels International | JD SPORTS vs. DALATA HOTEL | JD SPORTS vs. InterContinental Hotels Group | JD SPORTS vs. Park Hotels Resorts |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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