Correlation Between JD SPORTS and Ubisoft Entertainment
Can any of the company-specific risk be diversified away by investing in both JD SPORTS and Ubisoft Entertainment 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 Ubisoft Entertainment 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 Ubisoft Entertainment SA, you can compare the effects of market volatilities on JD SPORTS and Ubisoft Entertainment 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 Ubisoft Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Ubisoft Entertainment.
Diversification Opportunities for JD SPORTS and Ubisoft Entertainment
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 9JD and Ubisoft is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Ubisoft Entertainment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubisoft Entertainment 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 Ubisoft Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubisoft Entertainment has no effect on the direction of JD SPORTS i.e., JD SPORTS and Ubisoft Entertainment go up and down completely randomly.
Pair Corralation between JD SPORTS and Ubisoft Entertainment
Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Ubisoft Entertainment. In addition to that, JD SPORTS is 2.17 times more volatile than Ubisoft Entertainment SA. It trades about -0.16 of its total potential returns per unit of risk. Ubisoft Entertainment SA is currently generating about -0.18 per unit of volatility. If you would invest 1,351 in Ubisoft Entertainment SA on September 3, 2024 and sell it today you would lose (103.00) from holding Ubisoft Entertainment SA or give up 7.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD SPORTS FASH vs. Ubisoft Entertainment SA
Performance |
| Timeline |
| JD SPORTS FASH |
| Ubisoft Entertainment |
JD SPORTS and Ubisoft Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD SPORTS and Ubisoft Entertainment
The main advantage of trading using opposite JD SPORTS and Ubisoft Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, Ubisoft Entertainment 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 Ubisoft Entertainment will offset losses from the drop in Ubisoft Entertainment's long position.| JD SPORTS vs. FAST RETAILCOSPHDR 1 | JD SPORTS vs. FAST RETAIL ADR | JD SPORTS vs. Ross Stores | JD SPORTS vs. Genesco |
| Ubisoft Entertainment vs. Nintendo Co | Ubisoft Entertainment vs. Nintendo Co | Ubisoft Entertainment vs. Sea Limited | Ubisoft Entertainment vs. Take Two Interactive Software |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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