Correlation Between CF Industries and JD Sports
Can any of the company-specific risk be diversified away by investing in both CF Industries 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 CF Industries and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CF Industries Holdings and JD Sports Fashion, you can compare the effects of market volatilities on CF Industries 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 CF Industries with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and JD Sports.
Diversification Opportunities for CF Industries and JD Sports
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CF Industries and JDSPY is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings 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 CF Industries 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 CF Industries Holdings 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 CF Industries i.e., CF Industries and JD Sports go up and down completely randomly.
Pair Corralation between CF Industries and JD Sports
Allowing for the 90-day total investment horizon CF Industries Holdings is expected to generate 0.28 times more return on investment than JD Sports. However, CF Industries Holdings is 3.59 times less risky than JD Sports. It trades about 0.25 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 8,089 in CF Industries Holdings on August 30, 2024 and sell it today you would earn a total of 777.00 from holding CF Industries Holdings or generate 9.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CF Industries Holdings vs. JD Sports Fashion
Performance |
| Timeline |
| CF Industries Holdings |
| JD Sports Fashion |
CF Industries and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and JD Sports
The main advantage of trading using opposite CF Industries and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries 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.| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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