Correlation Between Strategic Investments and JD SPORTS
Can any of the company-specific risk be diversified away by investing in both Strategic Investments 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 Strategic Investments and JD SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Investments AS and JD SPORTS FASH, you can compare the effects of market volatilities on Strategic Investments 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 Strategic Investments with a short position of JD SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Investments and JD SPORTS.
Diversification Opportunities for Strategic Investments and JD SPORTS
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Strategic and 9JD is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and JD SPORTS FASH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD SPORTS FASH and Strategic Investments 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 Strategic Investments AS 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 FASH has no effect on the direction of Strategic Investments i.e., Strategic Investments and JD SPORTS go up and down completely randomly.
Pair Corralation between Strategic Investments and JD SPORTS
Assuming the 90 days horizon Strategic Investments AS is expected to generate 1.42 times more return on investment than JD SPORTS. However, Strategic Investments is 1.42 times more volatile than JD SPORTS FASH. It trades about -0.03 of its potential returns per unit of risk. JD SPORTS FASH is currently generating about -0.12 per unit of risk. If you would invest 14.00 in Strategic Investments AS on September 12, 2024 and sell it today you would lose (2.00) from holding Strategic Investments AS or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Investments AS vs. JD SPORTS FASH
Performance |
| Timeline |
| Strategic Investments |
| JD SPORTS FASH |
Strategic Investments and JD SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Investments and JD SPORTS
The main advantage of trading using opposite Strategic Investments and JD SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Investments 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's long position.| Strategic Investments vs. Ameriprise Financial | Strategic Investments vs. Ares Management Corp | Strategic Investments vs. Superior Plus Corp | Strategic Investments vs. SIVERS SEMICONDUCTORS AB |
| JD SPORTS vs. FAST RETAIL ADR | JD SPORTS vs. CCC SA | JD SPORTS vs. AOYAMA TRADING | JD SPORTS vs. Superior Plus Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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