Correlation Between Easy Software and JD SPORTS
Can any of the company-specific risk be diversified away by investing in both Easy Software 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 Easy Software and JD SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Easy Software AG and JD SPORTS FASH, you can compare the effects of market volatilities on Easy Software 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 Easy Software with a short position of JD SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easy Software and JD SPORTS.
Diversification Opportunities for Easy Software and JD SPORTS
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Easy and 9JD is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Easy Software AG 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 Easy Software 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 Easy Software AG 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 Easy Software i.e., Easy Software and JD SPORTS go up and down completely randomly.
Pair Corralation between Easy Software and JD SPORTS
Assuming the 90 days trading horizon Easy Software AG is expected to generate 0.79 times more return on investment than JD SPORTS. However, Easy Software AG is 1.26 times less risky than JD SPORTS. It trades about -0.02 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 1,800 in Easy Software AG on November 8, 2024 and sell it today you would lose (40.00) from holding Easy Software AG or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Easy Software AG vs. JD SPORTS FASH
Performance |
| Timeline |
| Easy Software AG |
| JD SPORTS FASH |
Easy Software and JD SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Easy Software and JD SPORTS
The main advantage of trading using opposite Easy Software and JD SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Easy Software 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.| Easy Software vs. OFFICE DEPOT | Easy Software vs. NorAm Drilling AS | Easy Software vs. alstria office REIT AG | Easy Software vs. Vienna Insurance Group |
| JD SPORTS vs. Playa Hotels Resorts | JD SPORTS vs. COLUMBIA SPORTSWEAR | JD SPORTS vs. TITANIUM TRANSPORTGROUP | JD SPORTS vs. Yuexiu Transport Infrastructure |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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