Correlation Between JD Sports and BT Group
Can any of the company-specific risk be diversified away by investing in both JD Sports and BT Group 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 BT Group 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 BT Group Plc, you can compare the effects of market volatilities on JD Sports and BT Group 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 BT Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and BT Group.
Diversification Opportunities for JD Sports and BT Group
Very good diversification
The 3 months correlation between JD Sports and BT-A is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and BT Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BT Group 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 BT Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BT Group Plc has no effect on the direction of JD Sports i.e., JD Sports and BT Group go up and down completely randomly.
Pair Corralation between JD Sports and BT Group
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the BT Group. In addition to that, JD Sports is 2.5 times more volatile than BT Group Plc. It trades about -0.14 of its total potential returns per unit of risk. BT Group Plc is currently generating about 0.22 per unit of volatility. If you would invest 14,045 in BT Group Plc on September 12, 2024 and sell it today you would earn a total of 1,155 from holding BT Group Plc or generate 8.22% 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. BT Group Plc
Performance |
| Timeline |
| JD Sports Fashion |
| BT Group Plc |
JD Sports and BT Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and BT Group
The main advantage of trading using opposite JD Sports and BT Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, BT Group 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 BT Group will offset losses from the drop in BT Group'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 |
| BT Group vs. Omega Healthcare Investors | BT Group vs. Induction Healthcare Group | BT Group vs. Southwest Airlines Co | BT Group vs. Impax Asset Management |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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