Correlation Between JD Sports and Waste Management
Can any of the company-specific risk be diversified away by investing in both JD Sports and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on JD Sports and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Waste Management.
Diversification Opportunities for JD Sports and Waste Management
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between JD Sports and Waste is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of JD Sports i.e., JD Sports and Waste Management go up and down completely randomly.
Pair Corralation between JD Sports and Waste Management
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Waste Management. In addition to that, JD Sports is 2.6 times more volatile than Waste Management. It trades about -0.24 of its total potential returns per unit of risk. Waste Management is currently generating about 0.02 per unit of volatility. If you would invest 20,778 in Waste Management on October 26, 2024 and sell it today you would earn a total of 247.00 from holding Waste Management or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
JD Sports Fashion vs. Waste Management
Performance |
| Timeline |
| JD Sports Fashion |
| Waste Management |
JD Sports and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Waste Management
The main advantage of trading using opposite JD Sports and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| JD Sports vs. Hollywood Bowl Group | JD Sports vs. Ubisoft Entertainment | JD Sports vs. Axway Software SA | JD Sports vs. Live Nation Entertainment |
| Waste Management vs. Spire Healthcare Group | Waste Management vs. Optima Health plc | Waste Management vs. Ecofin Global Utilities | Waste Management vs. Cairo Communication SpA |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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