Correlation Between JD SPORTS and Yum Brands
Can any of the company-specific risk be diversified away by investing in both JD SPORTS and Yum Brands 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 Yum Brands 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 Yum Brands, you can compare the effects of market volatilities on JD SPORTS and Yum Brands 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 Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Yum Brands.
Diversification Opportunities for JD SPORTS and Yum Brands
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between 9JD and Yum is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands 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 Yum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yum Brands has no effect on the direction of JD SPORTS i.e., JD SPORTS and Yum Brands go up and down completely randomly.
Pair Corralation between JD SPORTS and Yum Brands
Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Yum Brands. In addition to that, JD SPORTS is 1.11 times more volatile than Yum Brands. It trades about -0.04 of its total potential returns per unit of risk. Yum Brands is currently generating about 0.45 per unit of volatility. If you would invest 12,165 in Yum Brands on November 27, 2024 and sell it today you would earn a total of 2,210 from holding Yum Brands or generate 18.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
JD SPORTS FASH vs. Yum Brands
Performance |
Timeline |
JD SPORTS FASH |
Yum Brands |
JD SPORTS and Yum Brands Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JD SPORTS and Yum Brands
The main advantage of trading using opposite JD SPORTS and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, Yum Brands 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 Yum Brands will offset losses from the drop in Yum Brands' long position.JD SPORTS vs. COMPUTERSHARE | JD SPORTS vs. Computer And Technologies | JD SPORTS vs. UNITED INTERNET N | JD SPORTS vs. Check Point Software |
Yum Brands vs. Take Two Interactive Software | Yum Brands vs. Alfa Financial Software | Yum Brands vs. SCIENCE IN SPORT | Yum Brands vs. ANTA Sports Products |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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