Correlation Between JD Sports and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both JD Sports and DFS Furniture 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 DFS Furniture 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 DFS Furniture PLC, you can compare the effects of market volatilities on JD Sports and DFS Furniture 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 DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and DFS Furniture.
Diversification Opportunities for JD Sports and DFS Furniture
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JD Sports and DFS is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture 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 DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of JD Sports i.e., JD Sports and DFS Furniture go up and down completely randomly.
Pair Corralation between JD Sports and DFS Furniture
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the DFS Furniture. In addition to that, JD Sports is 1.57 times more volatile than DFS Furniture PLC. It trades about -0.19 of its total potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.03 per unit of volatility. If you would invest 14,380 in DFS Furniture PLC on October 24, 2024 and sell it today you would earn a total of 120.00 from holding DFS Furniture PLC or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. DFS Furniture PLC
Performance |
| Timeline |
| JD Sports Fashion |
| DFS Furniture PLC |
JD Sports and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and DFS Furniture
The main advantage of trading using opposite JD Sports and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| JD Sports vs. Oxford Technology 2 | JD Sports vs. Cognizant Technology Solutions | JD Sports vs. Auction Technology Group | JD Sports vs. Games Workshop Group |
| DFS Furniture vs. Atresmedia | DFS Furniture vs. Gear4music Plc | DFS Furniture vs. JD Sports Fashion | DFS Furniture vs. Everyman Media Group |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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