Correlation Between JD Sports and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both JD Sports and Rheinmetall 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 Rheinmetall 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 Rheinmetall AG, you can compare the effects of market volatilities on JD Sports and Rheinmetall 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 Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Rheinmetall.
Diversification Opportunities for JD Sports and Rheinmetall
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between JD Sports and Rheinmetall is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG 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 Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of JD Sports i.e., JD Sports and Rheinmetall go up and down completely randomly.
Pair Corralation between JD Sports and Rheinmetall
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Rheinmetall. In addition to that, JD Sports is 1.02 times more volatile than Rheinmetall AG. It trades about -0.16 of its total potential returns per unit of risk. Rheinmetall AG is currently generating about 0.08 per unit of volatility. If you would invest 63,002 in Rheinmetall AG on October 10, 2024 and sell it today you would earn a total of 1,718 from holding Rheinmetall AG or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Rheinmetall AG
Performance |
| Timeline |
| JD Sports Fashion |
| Rheinmetall AG |
JD Sports and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Rheinmetall
The main advantage of trading using opposite JD Sports and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.| JD Sports vs. Beazer Homes USA | JD Sports vs. Broadcom | JD Sports vs. UNIQA Insurance Group | JD Sports vs. Trainline Plc |
| Rheinmetall vs. Walmart | Rheinmetall vs. BYD Co | Rheinmetall vs. Volkswagen AG | Rheinmetall vs. Volkswagen AG Non Vtg |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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