Correlation Between JD Sports and Micron Technology
Can any of the company-specific risk be diversified away by investing in both JD Sports and Micron Technology 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 Micron Technology 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 Micron Technology, you can compare the effects of market volatilities on JD Sports and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Micron Technology.
Diversification Opportunities for JD Sports and Micron Technology
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JD Sports and Micron is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of JD Sports i.e., JD Sports and Micron Technology go up and down completely randomly.
Pair Corralation between JD Sports and Micron Technology
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Micron Technology. But the stock apears to be less risky and, when comparing its historical volatility, JD Sports Fashion is 2.2 times less risky than Micron Technology. The stock trades about -0.23 of its potential returns per unit of risk. The Micron Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,511 in Micron Technology on October 25, 2024 and sell it today you would earn a total of 390.00 from holding Micron Technology or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Micron Technology
Performance |
| Timeline |
| JD Sports Fashion |
| Micron Technology |
JD Sports and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Micron Technology
The main advantage of trading using opposite JD Sports and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.| JD Sports vs. Jacquet Metal Service | JD Sports vs. Eastinco Mining Exploration | JD Sports vs. Beowulf Mining | JD Sports vs. Trainline Plc |
| Micron Technology vs. Bloomsbury Publishing Plc | Micron Technology vs. Livermore Investments Group | Micron Technology vs. BE Semiconductor Industries | Micron Technology vs. Aberdeen Diversified Income |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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