Correlation Between EBay and JD
Can any of the company-specific risk be diversified away by investing in both EBay and JD 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 EBay and JD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eBay Inc and JD Inc, you can compare the effects of market volatilities on EBay and JD 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 EBay with a short position of JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBay and JD.
Diversification Opportunities for EBay and JD
Poor diversification
The 3 months correlation between EBay and JD is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding eBay Inc and JD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc and EBay 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 eBay Inc are associated (or correlated) with JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc has no effect on the direction of EBay i.e., EBay and JD go up and down completely randomly.
Pair Corralation between EBay and JD
Assuming the 90 days trading horizon eBay Inc is expected to generate 0.66 times more return on investment than JD. However, eBay Inc is 1.53 times less risky than JD. It trades about 0.0 of its potential returns per unit of risk. JD Inc is currently generating about -0.13 per unit of risk. If you would invest 18,185 in eBay Inc on August 23, 2024 and sell it today you would lose (145.00) from holding eBay Inc or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
eBay Inc vs. JD Inc
Performance |
| Timeline |
| eBay Inc |
| JD Inc |
EBay and JD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBay and JD
The main advantage of trading using opposite EBay and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBay position performs unexpectedly, JD 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 will offset losses from the drop in JD's long position.| EBay vs. Technos SA | EBay vs. Verizon Communications | EBay vs. Unifique Telecomunicaes SA | EBay vs. BIONTECH SE DRN |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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