Correlation Between ESH Acquisition and JD Sports
Can any of the company-specific risk be diversified away by investing in both ESH Acquisition 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 ESH Acquisition and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESH Acquisition Corp and JD Sports Fashion, you can compare the effects of market volatilities on ESH Acquisition 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 ESH Acquisition with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESH Acquisition and JD Sports.
Diversification Opportunities for ESH Acquisition and JD Sports
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ESH and JDDSF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ESH Acquisition Corp 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 ESH Acquisition 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 ESH Acquisition Corp 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 ESH Acquisition i.e., ESH Acquisition and JD Sports go up and down completely randomly.
Pair Corralation between ESH Acquisition and JD Sports
Given the investment horizon of 90 days ESH Acquisition is expected to generate 7.57 times less return on investment than JD Sports. But when comparing it to its historical volatility, ESH Acquisition Corp is 21.94 times less risky than JD Sports. It trades about 0.09 of its potential returns per unit of risk. JD Sports Fashion is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 109.00 in JD Sports Fashion on September 13, 2024 and sell it today you would earn a total of 37.00 from holding JD Sports Fashion or generate 33.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 76.52% |
| Values | Daily Returns |
ESH Acquisition Corp vs. JD Sports Fashion
Performance |
| Timeline |
| ESH Acquisition Corp |
| JD Sports Fashion |
ESH Acquisition and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESH Acquisition and JD Sports
The main advantage of trading using opposite ESH Acquisition and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESH Acquisition 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.| ESH Acquisition vs. HE Equipment Services | ESH Acquisition vs. AmTrust Financial Services | ESH Acquisition vs. Barings BDC | ESH Acquisition vs. Univest Pennsylvania |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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