Correlation Between HE Equipment and JD Sports
Can any of the company-specific risk be diversified away by investing in both HE Equipment 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 HE Equipment and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and JD Sports Fashion, you can compare the effects of market volatilities on HE Equipment 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 HE Equipment with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and JD Sports.
Diversification Opportunities for HE Equipment and JD Sports
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HEES and JDSPY is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services 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 HE Equipment 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 HE Equipment Services 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 HE Equipment i.e., HE Equipment and JD Sports go up and down completely randomly.
Pair Corralation between HE Equipment and JD Sports
Given the investment horizon of 90 days HE Equipment Services is expected to under-perform the JD Sports. But the stock apears to be less risky and, when comparing its historical volatility, HE Equipment Services is 1.77 times less risky than JD Sports. The stock trades about -0.44 of its potential returns per unit of risk. The JD Sports Fashion is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest 130.00 in JD Sports Fashion on September 29, 2024 and sell it today you would lose (19.00) from holding JD Sports Fashion or give up 14.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HE Equipment Services vs. JD Sports Fashion
Performance |
| Timeline |
| HE Equipment Services |
| JD Sports Fashion |
HE Equipment and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and JD Sports
The main advantage of trading using opposite HE Equipment and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment 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.| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |