Correlation Between JD SPORTS and Vale SA
Can any of the company-specific risk be diversified away by investing in both JD SPORTS and Vale SA 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 Vale SA 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 Vale SA, you can compare the effects of market volatilities on JD SPORTS and Vale SA 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 Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Vale SA.
Diversification Opportunities for JD SPORTS and Vale SA
Poor diversification
The 3 months correlation between 9JD and Vale is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA 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 Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of JD SPORTS i.e., JD SPORTS and Vale SA go up and down completely randomly.
Pair Corralation between JD SPORTS and Vale SA
Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Vale SA. In addition to that, JD SPORTS is 2.86 times more volatile than Vale SA. It trades about -0.14 of its total potential returns per unit of risk. Vale SA is currently generating about 0.05 per unit of volatility. If you would invest 917.00 in Vale SA on September 13, 2024 and sell it today you would earn a total of 13.00 from holding Vale SA or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
JD SPORTS FASH vs. Vale SA
Performance |
| Timeline |
| JD SPORTS FASH |
| Vale SA |
JD SPORTS and Vale SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD SPORTS and Vale SA
The main advantage of trading using opposite JD SPORTS and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, Vale SA 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 Vale SA will offset losses from the drop in Vale SA's long position.| JD SPORTS vs. FAST RETAIL ADR | JD SPORTS vs. CCC SA | JD SPORTS vs. AOYAMA TRADING | JD SPORTS vs. Superior Plus Corp |
| Vale SA vs. AM EAGLE OUTFITTERS | Vale SA vs. GRUPO CARSO A1 | Vale SA vs. Aegean Airlines SA | Vale SA vs. SIEM OFFSHORE NEW |
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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