Correlation Between JD Sports and Flutter Entertainment
Can any of the company-specific risk be diversified away by investing in both JD Sports and Flutter Entertainment 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 Flutter Entertainment 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 Flutter Entertainment PLC, you can compare the effects of market volatilities on JD Sports and Flutter Entertainment 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 Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Flutter Entertainment.
Diversification Opportunities for JD Sports and Flutter Entertainment
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between JD Sports and Flutter is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Flutter Entertainment PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flutter Entertainment 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 Flutter Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flutter Entertainment PLC has no effect on the direction of JD Sports i.e., JD Sports and Flutter Entertainment go up and down completely randomly.
Pair Corralation between JD Sports and Flutter Entertainment
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Flutter Entertainment. In addition to that, JD Sports is 1.76 times more volatile than Flutter Entertainment PLC. It trades about -0.23 of its total potential returns per unit of risk. Flutter Entertainment PLC is currently generating about 0.46 per unit of volatility. If you would invest 1,717,500 in Flutter Entertainment PLC on August 30, 2024 and sell it today you would earn a total of 447,500 from holding Flutter Entertainment PLC or generate 26.06% 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. Flutter Entertainment PLC
Performance |
| Timeline |
| JD Sports Fashion |
| Flutter Entertainment PLC |
JD Sports and Flutter Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Flutter Entertainment
The main advantage of trading using opposite JD Sports and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Flutter Entertainment 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 Flutter Entertainment will offset losses from the drop in Flutter Entertainment's long position.| JD Sports vs. Ondine Biomedical | JD Sports vs. Europa Metals | JD Sports vs. Lendinvest PLC | JD Sports vs. Neometals |
| Flutter Entertainment vs. Ondine Biomedical | Flutter Entertainment vs. Europa Metals | Flutter Entertainment vs. Lendinvest PLC | Flutter Entertainment vs. Neometals |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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