Correlation Between JD SPORTS and Flight Centre
Can any of the company-specific risk be diversified away by investing in both JD SPORTS and Flight Centre 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 Flight Centre 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 Flight Centre Travel, you can compare the effects of market volatilities on JD SPORTS and Flight Centre 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 Flight Centre. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Flight Centre.
Diversification Opportunities for JD SPORTS and Flight Centre
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 9JD and Flight is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Flight Centre Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flight Centre Travel 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 Flight Centre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flight Centre Travel has no effect on the direction of JD SPORTS i.e., JD SPORTS and Flight Centre go up and down completely randomly.
Pair Corralation between JD SPORTS and Flight Centre
Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Flight Centre. In addition to that, JD SPORTS is 2.75 times more volatile than Flight Centre Travel. It trades about -0.16 of its total potential returns per unit of risk. Flight Centre Travel is currently generating about 0.36 per unit of volatility. If you would invest 935.00 in Flight Centre Travel on September 4, 2024 and sell it today you would earn a total of 125.00 from holding Flight Centre Travel or generate 13.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
JD SPORTS FASH vs. Flight Centre Travel
Performance |
| Timeline |
| JD SPORTS FASH |
| Flight Centre Travel |
JD SPORTS and Flight Centre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD SPORTS and Flight Centre
The main advantage of trading using opposite JD SPORTS and Flight Centre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, Flight Centre 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 Flight Centre will offset losses from the drop in Flight Centre's long position.| JD SPORTS vs. ASURE SOFTWARE | JD SPORTS vs. CyberArk Software | JD SPORTS vs. UPDATE SOFTWARE | JD SPORTS vs. Kaiser Aluminum |
| Flight Centre vs. MOLSON RS BEVERAGE | Flight Centre vs. BOSTON BEER A | Flight Centre vs. THAI BEVERAGE | Flight Centre vs. United Breweries Co |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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