Correlation Between JD Sports and Lords Grp
Can any of the company-specific risk be diversified away by investing in both JD Sports and Lords Grp 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 Lords Grp 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 Lords Grp Trading, you can compare the effects of market volatilities on JD Sports and Lords Grp 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 Lords Grp. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Lords Grp.
Diversification Opportunities for JD Sports and Lords Grp
Very weak diversification
The 3 months correlation between JD Sports and Lords is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Lords Grp Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lords Grp Trading 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 Lords Grp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lords Grp Trading has no effect on the direction of JD Sports i.e., JD Sports and Lords Grp go up and down completely randomly.
Pair Corralation between JD Sports and Lords Grp
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Lords Grp. In addition to that, JD Sports is 1.23 times more volatile than Lords Grp Trading. It trades about -0.12 of its total potential returns per unit of risk. Lords Grp Trading is currently generating about -0.1 per unit of volatility. If you would invest 4,316 in Lords Grp Trading on September 3, 2024 and sell it today you would lose (696.00) from holding Lords Grp Trading or give up 16.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Lords Grp Trading
Performance |
| Timeline |
| JD Sports Fashion |
| Lords Grp Trading |
JD Sports and Lords Grp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Lords Grp
The main advantage of trading using opposite JD Sports and Lords Grp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Lords Grp 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 Lords Grp will offset losses from the drop in Lords Grp's long position.| JD Sports vs. Sovereign Metals | JD Sports vs. Ryanair Holdings plc | JD Sports vs. SilverCrest Metals | JD Sports vs. European Metals Holdings |
| Lords Grp vs. Zoom Video Communications | Lords Grp vs. JD Sports Fashion | Lords Grp vs. X FAB Silicon Foundries | Lords Grp vs. Ecofin Global Utilities |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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