Correlation Between JD Sports and DXC Technology
Can any of the company-specific risk be diversified away by investing in both JD Sports and DXC Technology 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 JD Sports and DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD Sports Fashion and DXC Technology Co, you can compare the effects of market volatilities on JD Sports and DXC Technology 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 JD Sports with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and DXC Technology.
Diversification Opportunities for JD Sports and DXC Technology
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between JD Sports and DXC is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and JD Sports 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 JD Sports Fashion are associated (or correlated) with DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of JD Sports i.e., JD Sports and DXC Technology go up and down completely randomly.
Pair Corralation between JD Sports and DXC Technology
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the DXC Technology. In addition to that, JD Sports is 1.39 times more volatile than DXC Technology Co. It trades about -0.17 of its total potential returns per unit of risk. DXC Technology Co is currently generating about 0.01 per unit of volatility. If you would invest 2,156 in DXC Technology Co on November 6, 2024 and sell it today you would lose (3.00) from holding DXC Technology Co or give up 0.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. DXC Technology Co
Performance |
| Timeline |
| JD Sports Fashion |
| DXC Technology |
JD Sports and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and DXC Technology
The main advantage of trading using opposite JD Sports and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, DXC Technology 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 DXC Technology will offset losses from the drop in DXC Technology's long position.| JD Sports vs. Universal Music Group | JD Sports vs. Air Products Chemicals | JD Sports vs. Alliance Data Systems | JD Sports vs. Rosslyn Data Technologies |
| DXC Technology vs. Scottish American Investment | DXC Technology vs. EJF Investments | DXC Technology vs. Seraphim Space Investment | DXC Technology vs. bet at home AG |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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