Correlation Between JD Sports and Edita Food
Can any of the company-specific risk be diversified away by investing in both JD Sports and Edita Food 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 Edita Food 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 Edita Food Industries, you can compare the effects of market volatilities on JD Sports and Edita Food 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 Edita Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Edita Food.
Diversification Opportunities for JD Sports and Edita Food
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between JD Sports and Edita is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Edita Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edita Food Industries 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 Edita Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edita Food Industries has no effect on the direction of JD Sports i.e., JD Sports and Edita Food go up and down completely randomly.
Pair Corralation between JD Sports and Edita Food
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Edita Food. But the stock apears to be less risky and, when comparing its historical volatility, JD Sports Fashion is 1.1 times less risky than Edita Food. The stock trades about -0.01 of its potential returns per unit of risk. The Edita Food Industries is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 239.00 in Edita Food Industries on November 3, 2024 and sell it today you would lose (39.00) from holding Edita Food Industries or give up 16.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Edita Food Industries
Performance |
| Timeline |
| JD Sports Fashion |
| Edita Food Industries |
JD Sports and Edita Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Edita Food
The main advantage of trading using opposite JD Sports and Edita Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Edita Food 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 Edita Food will offset losses from the drop in Edita Food's long position.| JD Sports vs. FC Investment Trust | JD Sports vs. Bankers Investment Trust | JD Sports vs. Batm Advanced Communications | JD Sports vs. The Mercantile Investment |
| Edita Food vs. TBC Bank Group | Edita Food vs. Bank of Ireland | Edita Food vs. Discover Financial Services | Edita Food vs. Regions Financial Corp |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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