Correlation Between JD Sports and Herald Investment
Can any of the company-specific risk be diversified away by investing in both JD Sports and Herald Investment 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 Herald Investment 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 Herald Investment Trust, you can compare the effects of market volatilities on JD Sports and Herald Investment 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 Herald Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Herald Investment.
Diversification Opportunities for JD Sports and Herald Investment
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JD Sports and Herald is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Herald Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herald Investment Trust 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 Herald Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herald Investment Trust has no effect on the direction of JD Sports i.e., JD Sports and Herald Investment go up and down completely randomly.
Pair Corralation between JD Sports and Herald Investment
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Herald Investment. In addition to that, JD Sports is 3.41 times more volatile than Herald Investment Trust. It trades about -0.27 of its total potential returns per unit of risk. Herald Investment Trust is currently generating about 0.36 per unit of volatility. If you would invest 211,000 in Herald Investment Trust on August 28, 2024 and sell it today you would earn a total of 21,500 from holding Herald Investment Trust or generate 10.19% 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. Herald Investment Trust
Performance |
| Timeline |
| JD Sports Fashion |
| Herald Investment Trust |
JD Sports and Herald Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Herald Investment
The main advantage of trading using opposite JD Sports and Herald Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Herald Investment 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 Herald Investment will offset losses from the drop in Herald Investment's 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 |
| Herald Investment vs. Catalyst Media Group | Herald Investment vs. Oncimmune Holdings plc | Herald Investment vs. Invesco Health Care | Herald Investment vs. Coor Service Management |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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