Correlation Between Century Aluminum and JD Sports
Can any of the company-specific risk be diversified away by investing in both Century Aluminum 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 Century Aluminum and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and JD Sports Fashion, you can compare the effects of market volatilities on Century Aluminum 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 Century Aluminum with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and JD Sports.
Diversification Opportunities for Century Aluminum and JD Sports
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Century and JDDSF is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum 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 Century Aluminum 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 Century Aluminum 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 Century Aluminum i.e., Century Aluminum and JD Sports go up and down completely randomly.
Pair Corralation between Century Aluminum and JD Sports
Given the investment horizon of 90 days Century Aluminum is expected to generate 1.73 times more return on investment than JD Sports. However, Century Aluminum is 1.73 times more volatile than JD Sports Fashion. It trades about 0.08 of its potential returns per unit of risk. JD Sports Fashion is currently generating about 0.03 per unit of risk. If you would invest 1,663 in Century Aluminum on September 2, 2024 and sell it today you would earn a total of 620.00 from holding Century Aluminum or generate 37.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Aluminum vs. JD Sports Fashion
Performance |
| Timeline |
| Century Aluminum |
| JD Sports Fashion |
Century Aluminum and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and JD Sports
The main advantage of trading using opposite Century Aluminum and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum 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.| Century Aluminum vs. Fortitude Gold Corp | Century Aluminum vs. New Gold | Century Aluminum vs. Galiano Gold | Century Aluminum vs. GoldMining |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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