Correlation Between Global E and JD Sports
Can any of the company-specific risk be diversified away by investing in both Global E 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 Global E and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global E Online and JD Sports Fashion, you can compare the effects of market volatilities on Global E 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 Global E with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and JD Sports.
Diversification Opportunities for Global E and JD Sports
Good diversification
The 3 months correlation between Global and JDDSF is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online 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 Global E 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 Global E Online 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 Global E i.e., Global E and JD Sports go up and down completely randomly.
Pair Corralation between Global E and JD Sports
Given the investment horizon of 90 days Global E Online is expected to generate 1.26 times more return on investment than JD Sports. However, Global E is 1.26 times more volatile than JD Sports Fashion. It trades about 0.04 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.01 per unit of risk. If you would invest 3,995 in Global E Online on August 29, 2024 and sell it today you would earn a total of 1,191 from holding Global E Online or generate 29.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global E Online vs. JD Sports Fashion
Performance |
| Timeline |
| Global E Online |
| JD Sports Fashion |
Global E and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global E and JD Sports
The main advantage of trading using opposite Global E and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global E 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.| Global E vs. MercadoLibre | Global E vs. PDD Holdings | Global E vs. JD Inc Adr | Global E vs. Alibaba Group Holding |
| 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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