Correlation Between JD SPORTS and Sterling Construction
Can any of the company-specific risk be diversified away by investing in both JD SPORTS and Sterling Construction 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 Sterling Construction 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 Sterling Construction, you can compare the effects of market volatilities on JD SPORTS and Sterling Construction 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 Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Sterling Construction.
Diversification Opportunities for JD SPORTS and Sterling Construction
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 9JD and Sterling is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction 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 Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of JD SPORTS i.e., JD SPORTS and Sterling Construction go up and down completely randomly.
Pair Corralation between JD SPORTS and Sterling Construction
Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Sterling Construction. But the stock apears to be less risky and, when comparing its historical volatility, JD SPORTS FASH is 1.58 times less risky than Sterling Construction. The stock trades about -0.09 of its potential returns per unit of risk. The Sterling Construction is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 17,210 in Sterling Construction on October 16, 2024 and sell it today you would lose (690.00) from holding Sterling Construction or give up 4.01% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
JD SPORTS FASH vs. Sterling Construction
Performance |
Timeline |
JD SPORTS FASH |
Sterling Construction |
JD SPORTS and Sterling Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JD SPORTS and Sterling Construction
The main advantage of trading using opposite JD SPORTS and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, Sterling Construction 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 Sterling Construction will offset losses from the drop in Sterling Construction's long position.JD SPORTS vs. ANTA SPORTS PRODUCT | JD SPORTS vs. Osisko Metals | JD SPORTS vs. ecotel communication ag | JD SPORTS vs. Charter Communications |
Sterling Construction vs. GRIFFIN MINING LTD | Sterling Construction vs. GALENA MINING LTD | Sterling Construction vs. Stag Industrial | Sterling Construction vs. Perseus Mining Limited |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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