Correlation Between JD Sports and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both JD Sports and CNH Industrial 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 CNH Industrial 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 CNH Industrial NV, you can compare the effects of market volatilities on JD Sports and CNH Industrial 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 CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and CNH Industrial.
Diversification Opportunities for JD Sports and CNH Industrial
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JD Sports and CNH is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial 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 CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of JD Sports i.e., JD Sports and CNH Industrial go up and down completely randomly.
Pair Corralation between JD Sports and CNH Industrial
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the CNH Industrial. In addition to that, JD Sports is 1.13 times more volatile than CNH Industrial NV. It trades about -0.14 of its total potential returns per unit of risk. CNH Industrial NV is currently generating about 0.11 per unit of volatility. If you would invest 1,055 in CNH Industrial NV on September 12, 2024 and sell it today you would earn a total of 90.00 from holding CNH Industrial NV or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. CNH Industrial NV
Performance |
| Timeline |
| JD Sports Fashion |
| CNH Industrial NV |
JD Sports and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and CNH Industrial
The main advantage of trading using opposite JD Sports and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| JD Sports vs. National Atomic Co | JD Sports vs. OTP Bank Nyrt | JD Sports vs. Samsung Electronics Co | JD Sports vs. Samsung Electronics Co |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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