Correlation Between JD Sports and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both JD Sports and SBM Offshore 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 SBM Offshore 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 SBM Offshore NV, you can compare the effects of market volatilities on JD Sports and SBM Offshore 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 SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and SBM Offshore.
Diversification Opportunities for JD Sports and SBM Offshore
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between JD Sports and SBM is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV 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 SBM Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM Offshore NV has no effect on the direction of JD Sports i.e., JD Sports and SBM Offshore go up and down completely randomly.
Pair Corralation between JD Sports and SBM Offshore
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the SBM Offshore. In addition to that, JD Sports is 1.65 times more volatile than SBM Offshore NV. It trades about -0.43 of its total potential returns per unit of risk. SBM Offshore NV is currently generating about 0.14 per unit of volatility. If you would invest 1,666 in SBM Offshore NV on August 26, 2024 and sell it today you would earn a total of 94.00 from holding SBM Offshore NV or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
JD Sports Fashion vs. SBM Offshore NV
Performance |
| Timeline |
| JD Sports Fashion |
| SBM Offshore NV |
JD Sports and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and SBM Offshore
The main advantage of trading using opposite JD Sports and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, SBM Offshore 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 SBM Offshore will offset losses from the drop in SBM Offshore's long position.| JD Sports vs. Lloyds Banking Group | JD Sports vs. Premier African Minerals | JD Sports vs. SANTANDER UK 8 | JD Sports vs. 88 Energy |
| SBM Offshore vs. Central Asia Metals | SBM Offshore vs. MediaZest plc | SBM Offshore vs. JD Sports Fashion | SBM Offshore vs. Prosiebensat 1 Media |
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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