Correlation Between JD SPORTS and Volkswagen
Can any of the company-specific risk be diversified away by investing in both JD SPORTS and Volkswagen 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 Volkswagen 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 Volkswagen AG, you can compare the effects of market volatilities on JD SPORTS and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Volkswagen.
Diversification Opportunities for JD SPORTS and Volkswagen
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 9JD and Volkswagen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of JD SPORTS i.e., JD SPORTS and Volkswagen go up and down completely randomly.
Pair Corralation between JD SPORTS and Volkswagen
Assuming the 90 days horizon JD SPORTS FASH is expected to generate 2.03 times more return on investment than Volkswagen. However, JD SPORTS is 2.03 times more volatile than Volkswagen AG. It trades about -0.01 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.09 per unit of risk. If you would invest 170.00 in JD SPORTS FASH on September 3, 2024 and sell it today you would lose (48.00) from holding JD SPORTS FASH or give up 28.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD SPORTS FASH vs. Volkswagen AG
Performance |
| Timeline |
| JD SPORTS FASH |
| Volkswagen AG |
JD SPORTS and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD SPORTS and Volkswagen
The main advantage of trading using opposite JD SPORTS and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| JD SPORTS vs. FAST RETAILCOSPHDR 1 | JD SPORTS vs. FAST RETAIL ADR | JD SPORTS vs. Ross Stores | JD SPORTS vs. Genesco |
| Volkswagen vs. Wayside Technology Group | Volkswagen vs. SMA Solar Technology | Volkswagen vs. FANDIFI TECHNOLOGY P | Volkswagen vs. JD SPORTS FASH |
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 Stocks Directory module to find actively traded stocks across global markets.
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