Correlation Between Impax Asset and JD Sports
Can any of the company-specific risk be diversified away by investing in both Impax Asset 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 Impax Asset and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Impax Asset Management and JD Sports Fashion, you can compare the effects of market volatilities on Impax Asset 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 Impax Asset with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impax Asset and JD Sports.
Diversification Opportunities for Impax Asset and JD Sports
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Impax and JD Sports is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Impax Asset Management 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 Impax Asset 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 Impax Asset Management 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 Impax Asset i.e., Impax Asset and JD Sports go up and down completely randomly.
Pair Corralation between Impax Asset and JD Sports
Assuming the 90 days trading horizon Impax Asset Management is expected to under-perform the JD Sports. But the stock apears to be less risky and, when comparing its historical volatility, Impax Asset Management is 1.23 times less risky than JD Sports. The stock trades about -0.25 of its potential returns per unit of risk. The JD Sports Fashion is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 9,514 in JD Sports Fashion on November 2, 2024 and sell it today you would lose (796.00) from holding JD Sports Fashion or give up 8.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Impax Asset Management vs. JD Sports Fashion
Performance |
| Timeline |
| Impax Asset Management |
| JD Sports Fashion |
Impax Asset and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Impax Asset and JD Sports
The main advantage of trading using opposite Impax Asset and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impax Asset 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.| Impax Asset vs. National Beverage Corp | Impax Asset vs. Grieg Seafood | Impax Asset vs. Fevertree Drinks Plc | Impax Asset vs. Sealed Air Corp |
| JD Sports vs. Bellevue Healthcare Trust | JD Sports vs. Concurrent Technologies Plc | JD Sports vs. Spotify Technology SA | JD Sports vs. Roper Technologies |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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