Correlation Between JD Sports and Liberty Media
Can any of the company-specific risk be diversified away by investing in both JD Sports and Liberty Media 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 Liberty Media 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 Liberty Media Corp, you can compare the effects of market volatilities on JD Sports and Liberty Media 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 Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Liberty Media.
Diversification Opportunities for JD Sports and Liberty Media
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between JD Sports and Liberty is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Liberty Media Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media Corp 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 Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media Corp has no effect on the direction of JD Sports i.e., JD Sports and Liberty Media go up and down completely randomly.
Pair Corralation between JD Sports and Liberty Media
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Liberty Media. In addition to that, JD Sports is 2.17 times more volatile than Liberty Media Corp. It trades about -0.18 of its total potential returns per unit of risk. Liberty Media Corp is currently generating about 0.19 per unit of volatility. If you would invest 7,454 in Liberty Media Corp on September 4, 2024 and sell it today you would earn a total of 601.00 from holding Liberty Media Corp or generate 8.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Liberty Media Corp
Performance |
| Timeline |
| JD Sports Fashion |
| Liberty Media Corp |
JD Sports and Liberty Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Liberty Media
The main advantage of trading using opposite JD Sports and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Liberty Media 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 Liberty Media will offset losses from the drop in Liberty Media's long position.| JD Sports vs. Check Point Software | JD Sports vs. Microchip Technology | JD Sports vs. Roper Technologies | JD Sports vs. Raytheon Technologies Corp |
| Liberty Media vs. Teradata Corp | Liberty Media vs. Aeorema Communications Plc | Liberty Media vs. Charter Communications Cl | Liberty Media vs. Austevoll Seafood ASA |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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