Correlation Between JD Sports and Park Hotels
Can any of the company-specific risk be diversified away by investing in both JD Sports and Park Hotels 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 Park Hotels 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 Park Hotels Resorts, you can compare the effects of market volatilities on JD Sports and Park Hotels 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 Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Park Hotels.
Diversification Opportunities for JD Sports and Park Hotels
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JD Sports and Park is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts 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 Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of JD Sports i.e., JD Sports and Park Hotels go up and down completely randomly.
Pair Corralation between JD Sports and Park Hotels
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Park Hotels. In addition to that, JD Sports is 1.64 times more volatile than Park Hotels Resorts. It trades about -0.05 of its total potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.03 per unit of volatility. If you would invest 1,382 in Park Hotels Resorts on September 4, 2024 and sell it today you would earn a total of 154.00 from holding Park Hotels Resorts or generate 11.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Park Hotels Resorts
Performance |
| Timeline |
| JD Sports Fashion |
| Park Hotels Resorts |
JD Sports and Park Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Park Hotels
The main advantage of trading using opposite JD Sports and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Park Hotels 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 Park Hotels will offset losses from the drop in Park Hotels' long position.| JD Sports vs. Check Point Software | JD Sports vs. Microchip Technology | JD Sports vs. Roper Technologies | JD Sports vs. Raytheon Technologies Corp |
| Park Hotels vs. McEwen Mining | Park Hotels vs. Neometals | Park Hotels vs. Lundin Mining Corp | Park Hotels vs. Endeavour Mining Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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