Correlation Between IB Acquisition and JD Sports
Can any of the company-specific risk be diversified away by investing in both IB 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 IB 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 IB Acquisition Corp and JD Sports Fashion, you can compare the effects of market volatilities on IB 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 IB Acquisition with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of IB Acquisition and JD Sports.
Diversification Opportunities for IB Acquisition and JD Sports
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IBACR and JDSPY is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding IB 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 IB 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 IB 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 IB Acquisition i.e., IB Acquisition and JD Sports go up and down completely randomly.
Pair Corralation between IB Acquisition and JD Sports
Assuming the 90 days horizon IB Acquisition Corp is expected to under-perform the JD Sports. In addition to that, IB Acquisition is 2.68 times more volatile than JD Sports Fashion. It trades about -0.03 of its total potential returns per unit of risk. JD Sports Fashion is currently generating about -0.05 per unit of volatility. If you would invest 144.00 in JD Sports Fashion on September 13, 2024 and sell it today you would lose (15.00) from holding JD Sports Fashion or give up 10.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
IB Acquisition Corp vs. JD Sports Fashion
Performance |
| Timeline |
| IB Acquisition Corp |
| JD Sports Fashion |
IB Acquisition and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IB Acquisition and JD Sports
The main advantage of trading using opposite IB Acquisition and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IB 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.| IB Acquisition vs. Perseus Mining Limited | IB Acquisition vs. Mesa Air Group | IB Acquisition vs. HF Sinclair Corp | IB Acquisition vs. Westinghouse Air Brake |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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