Correlation Between JD Sports and Medical Properties
Can any of the company-specific risk be diversified away by investing in both JD Sports and Medical Properties 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 Medical Properties 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 Medical Properties Trust, you can compare the effects of market volatilities on JD Sports and Medical Properties 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 Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Medical Properties.
Diversification Opportunities for JD Sports and Medical Properties
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between JD Sports and Medical is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust 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 Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of JD Sports i.e., JD Sports and Medical Properties go up and down completely randomly.
Pair Corralation between JD Sports and Medical Properties
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Medical Properties. But the stock apears to be less risky and, when comparing its historical volatility, JD Sports Fashion is 1.28 times less risky than Medical Properties. The stock trades about -0.13 of its potential returns per unit of risk. The Medical Properties Trust is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 404.00 in Medical Properties Trust on November 7, 2024 and sell it today you would earn a total of 68.00 from holding Medical Properties Trust or generate 16.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Medical Properties Trust
Performance |
| Timeline |
| JD Sports Fashion |
| Medical Properties Trust |
JD Sports and Medical Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Medical Properties
The main advantage of trading using opposite JD Sports and Medical Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Medical Properties 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 Medical Properties will offset losses from the drop in Medical Properties' long position.| JD Sports vs. Zoom Video Communications | JD Sports vs. CAP LEASE AVIATION | JD Sports vs. Edinburgh Investment Trust | JD Sports vs. Mineral Financial Investments |
| Medical Properties vs. Samsung Electronics Co | Medical Properties vs. Samsung Electronics Co | Medical Properties vs. Toyota Motor Corp | Medical Properties vs. Reliance Industries Ltd |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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