Correlation Between JD Sports and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both JD Sports and Gamma Communications 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 Gamma Communications 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 Gamma Communications PLC, you can compare the effects of market volatilities on JD Sports and Gamma Communications 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 Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Gamma Communications.
Diversification Opportunities for JD Sports and Gamma Communications
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JD Sports and Gamma is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Gamma Communications PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications 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 Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications PLC has no effect on the direction of JD Sports i.e., JD Sports and Gamma Communications go up and down completely randomly.
Pair Corralation between JD Sports and Gamma Communications
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Gamma Communications. In addition to that, JD Sports is 3.94 times more volatile than Gamma Communications PLC. It trades about -0.14 of its total potential returns per unit of risk. Gamma Communications PLC is currently generating about 0.01 per unit of volatility. If you would invest 162,000 in Gamma Communications PLC on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Gamma Communications PLC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Gamma Communications PLC
Performance |
| Timeline |
| JD Sports Fashion |
| Gamma Communications PLC |
JD Sports and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Gamma Communications
The main advantage of trading using opposite JD Sports and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' 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 |
| Gamma Communications vs. Catalyst Media Group | Gamma Communications vs. CATLIN GROUP | Gamma Communications vs. Tamburi Investment Partners | Gamma Communications vs. Magnora ASA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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