Correlation Between JD Sports and Catena Media
Can any of the company-specific risk be diversified away by investing in both JD Sports and Catena Media 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 Catena Media 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 Catena Media PLC, you can compare the effects of market volatilities on JD Sports and Catena Media 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 Catena Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Catena Media.
Diversification Opportunities for JD Sports and Catena Media
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JD Sports and Catena is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Catena Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catena Media PLC 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 Catena Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catena Media PLC has no effect on the direction of JD Sports i.e., JD Sports and Catena Media go up and down completely randomly.
Pair Corralation between JD Sports and Catena Media
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Catena Media. But the stock apears to be less risky and, when comparing its historical volatility, JD Sports Fashion is 1.52 times less risky than Catena Media. The stock trades about -0.06 of its potential returns per unit of risk. The Catena Media PLC is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 568.00 in Catena Media PLC on August 26, 2024 and sell it today you would lose (125.00) from holding Catena Media PLC or give up 22.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Catena Media PLC
Performance |
| Timeline |
| JD Sports Fashion |
| Catena Media PLC |
JD Sports and Catena Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Catena Media
The main advantage of trading using opposite JD Sports and Catena Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Catena Media 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 Catena Media will offset losses from the drop in Catena Media'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 |
| Catena Media vs. Herald Investment Trust | Catena Media vs. The Mercantile Investment | Catena Media vs. National Beverage Corp | Catena Media vs. Molson Coors Beverage |
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..
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |