Correlation Between BT Group and JD Sports
Can any of the company-specific risk be diversified away by investing in both BT Group 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 BT Group and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BT Group Plc and JD Sports Fashion, you can compare the effects of market volatilities on BT Group 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 BT Group with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of BT Group and JD Sports.
Diversification Opportunities for BT Group and JD Sports
Very good diversification
The 3 months correlation between BT-A and JD Sports is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding BT Group Plc 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 BT Group 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 BT Group Plc 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 BT Group i.e., BT Group and JD Sports go up and down completely randomly.
Pair Corralation between BT Group and JD Sports
Assuming the 90 days trading horizon BT Group Plc is expected to generate 0.5 times more return on investment than JD Sports. However, BT Group Plc is 1.99 times less risky than JD Sports. It trades about 0.07 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.16 per unit of risk. If you would invest 14,525 in BT Group Plc on September 12, 2024 and sell it today you would earn a total of 880.00 from holding BT Group Plc or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
BT Group Plc vs. JD Sports Fashion
Performance |
| Timeline |
| BT Group Plc |
| JD Sports Fashion |
BT Group and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BT Group and JD Sports
The main advantage of trading using opposite BT Group and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BT Group 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.| BT Group vs. Omega Healthcare Investors | BT Group vs. Induction Healthcare Group | BT Group vs. Southwest Airlines Co | BT Group vs. Impax Asset Management |
| JD Sports vs. National Atomic Co | JD Sports vs. OTP Bank Nyrt | JD Sports vs. Samsung Electronics Co | JD Sports vs. Samsung Electronics Co |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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