Correlation Between Buckle and JD Sports
Can any of the company-specific risk be diversified away by investing in both Buckle and JD Sports 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 Buckle and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buckle Inc and JD Sports Fashion, you can compare the effects of market volatilities on Buckle and JD Sports 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 Buckle with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buckle and JD Sports.
Diversification Opportunities for Buckle and JD Sports
Excellent diversification
The 3 months correlation between Buckle and JDSPY is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Buckle Inc and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion and Buckle 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 Buckle Inc are associated (or correlated) with JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Buckle i.e., Buckle and JD Sports go up and down completely randomly.
Pair Corralation between Buckle and JD Sports
Considering the 90-day investment horizon Buckle Inc is expected to generate 0.38 times more return on investment than JD Sports. However, Buckle Inc is 2.63 times less risky than JD Sports. It trades about 0.42 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.3 per unit of risk. If you would invest 4,311 in Buckle Inc on August 28, 2024 and sell it today you would earn a total of 815.00 from holding Buckle Inc or generate 18.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buckle Inc vs. JD Sports Fashion
Performance |
| Timeline |
| Buckle Inc |
| JD Sports Fashion |
Buckle and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buckle and JD Sports
The main advantage of trading using opposite Buckle and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buckle position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.The idea behind Buckle Inc and JD Sports Fashion pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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