Correlation Between JD Sports and International Consolidated
Can any of the company-specific risk be diversified away by investing in both JD Sports and International Consolidated 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 International Consolidated 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 International Consolidated Airlines, you can compare the effects of market volatilities on JD Sports and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and International Consolidated.
Diversification Opportunities for JD Sports and International Consolidated
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JD Sports and International is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of JD Sports i.e., JD Sports and International Consolidated go up and down completely randomly.
Pair Corralation between JD Sports and International Consolidated
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the International Consolidated. In addition to that, JD Sports is 1.72 times more volatile than International Consolidated Airlines. It trades about -0.44 of its total potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.33 per unit of volatility. If you would invest 21,400 in International Consolidated Airlines on August 25, 2024 and sell it today you would earn a total of 3,200 from holding International Consolidated Airlines or generate 14.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. International Consolidated Air
Performance |
| Timeline |
| JD Sports Fashion |
| International Consolidated |
JD Sports and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and International Consolidated
The main advantage of trading using opposite JD Sports and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| JD Sports vs. Toyota Motor Corp | JD Sports vs. SoftBank Group Corp | JD Sports vs. State Bank of | JD Sports vs. Freddie Mac |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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