Correlation Between JD Sports and Dow Jones
Can any of the company-specific risk be diversified away by investing in both JD Sports and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on JD Sports and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Dow Jones.
Diversification Opportunities for JD Sports and Dow Jones
Excellent diversification
The 3 months correlation between JD Sports and Dow is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of JD Sports i.e., JD Sports and Dow Jones go up and down completely randomly.
Pair Corralation between JD Sports and Dow Jones
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Dow Jones. In addition to that, JD Sports is 4.34 times more volatile than Dow Jones Industrial. It trades about -0.27 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of volatility. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Dow Jones Industrial
Performance |
| Timeline |
JD Sports and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
JD Sports Fashion
Pair trading matchups for JD Sports
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with JD Sports and Dow Jones
The main advantage of trading using opposite JD Sports and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' 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 |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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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