Correlation Between JD Sports and Bank of Ireland
Can any of the company-specific risk be diversified away by investing in both JD Sports and Bank of Ireland 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 Bank of Ireland 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 Bank of Ireland, you can compare the effects of market volatilities on JD Sports and Bank of Ireland 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 Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Bank of Ireland.
Diversification Opportunities for JD Sports and Bank of Ireland
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JD Sports and Bank is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Bank of Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ireland 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 Bank of Ireland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ireland has no effect on the direction of JD Sports i.e., JD Sports and Bank of Ireland go up and down completely randomly.
Pair Corralation between JD Sports and Bank of Ireland
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Bank of Ireland. In addition to that, JD Sports is 2.13 times more volatile than Bank of Ireland. It trades about -0.18 of its total potential returns per unit of risk. Bank of Ireland is currently generating about -0.14 per unit of volatility. If you would invest 882.00 in Bank of Ireland on September 4, 2024 and sell it today you would lose (56.00) from holding Bank of Ireland or give up 6.35% 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. Bank of Ireland
Performance |
| Timeline |
| JD Sports Fashion |
| Bank of Ireland |
JD Sports and Bank of Ireland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Bank of Ireland
The main advantage of trading using opposite JD Sports and Bank of Ireland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Bank of Ireland 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 Bank of Ireland will offset losses from the drop in Bank of Ireland's long position.| JD Sports vs. Check Point Software | JD Sports vs. Microchip Technology | JD Sports vs. Roper Technologies | JD Sports vs. Raytheon Technologies Corp |
| Bank of Ireland vs. SupplyMe Capital PLC | Bank of Ireland vs. SM Energy Co | Bank of Ireland vs. FuelCell Energy | Bank of Ireland vs. Grand Vision 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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