Correlation Between JD Sports and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both JD Sports and Ebro Foods 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 Ebro Foods 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 Ebro Foods, you can compare the effects of market volatilities on JD Sports and Ebro Foods 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 Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Ebro Foods.
Diversification Opportunities for JD Sports and Ebro Foods
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JD Sports and Ebro is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods 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 Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods has no effect on the direction of JD Sports i.e., JD Sports and Ebro Foods go up and down completely randomly.
Pair Corralation between JD Sports and Ebro Foods
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Ebro Foods. In addition to that, JD Sports is 4.84 times more volatile than Ebro Foods. It trades about -0.1 of its total potential returns per unit of risk. Ebro Foods is currently generating about 0.06 per unit of volatility. If you would invest 1,535 in Ebro Foods on October 26, 2024 and sell it today you would earn a total of 69.00 from holding Ebro Foods or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Ebro Foods
Performance |
| Timeline |
| JD Sports Fashion |
| Ebro Foods |
JD Sports and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Ebro Foods
The main advantage of trading using opposite JD Sports and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' 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 |
| Ebro Foods vs. URU Metals | Ebro Foods vs. Mineral Financial Investments | Ebro Foods vs. FC Investment Trust | Ebro Foods vs. Central Asia Metals |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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