Correlation Between JD Sports and Erste Group
Can any of the company-specific risk be diversified away by investing in both JD Sports and Erste Group 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 Erste Group 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 Erste Group Bank, you can compare the effects of market volatilities on JD Sports and Erste Group 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 Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Erste Group.
Diversification Opportunities for JD Sports and Erste Group
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between JD Sports and Erste is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank 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 Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of JD Sports i.e., JD Sports and Erste Group go up and down completely randomly.
Pair Corralation between JD Sports and Erste Group
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Erste Group. In addition to that, JD Sports is 3.88 times more volatile than Erste Group Bank. It trades about -0.18 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.08 per unit of volatility. If you would invest 5,164 in Erste Group Bank on September 4, 2024 and sell it today you would earn a total of 90.00 from holding Erste Group Bank or generate 1.74% 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. Erste Group Bank
Performance |
| Timeline |
| JD Sports Fashion |
| Erste Group Bank |
JD Sports and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Erste Group
The main advantage of trading using opposite JD Sports and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Erste Group 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 Erste Group will offset losses from the drop in Erste Group'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 |
| Erste Group vs. Samsung Electronics Co | Erste Group vs. Samsung Electronics Co | Erste Group vs. Hyundai Motor | Erste Group vs. Toyota Motor 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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