Correlation Between JD Sports and Lowland Investment
Can any of the company-specific risk be diversified away by investing in both JD Sports and Lowland 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 Lowland 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 Lowland Investment Co, you can compare the effects of market volatilities on JD Sports and Lowland 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 Lowland Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Lowland Investment.
Diversification Opportunities for JD Sports and Lowland Investment
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JD Sports and Lowland is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Lowland Investment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowland Investment 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 Lowland Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowland Investment has no effect on the direction of JD Sports i.e., JD Sports and Lowland Investment go up and down completely randomly.
Pair Corralation between JD Sports and Lowland Investment
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Lowland Investment. In addition to that, JD Sports is 3.62 times more volatile than Lowland Investment Co. It trades about -0.28 of its total potential returns per unit of risk. Lowland Investment Co is currently generating about -0.06 per unit of volatility. If you would invest 12,800 in Lowland Investment Co on August 28, 2024 and sell it today you would lose (300.00) from holding Lowland Investment Co or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Lowland Investment Co
Performance |
| Timeline |
| JD Sports Fashion |
| Lowland Investment |
JD Sports and Lowland Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Lowland Investment
The main advantage of trading using opposite JD Sports and Lowland Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Lowland 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 Lowland Investment will offset losses from the drop in Lowland 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 |
| Lowland Investment vs. Intermediate Capital Group | Lowland Investment vs. Discover Financial Services | Lowland Investment vs. Ameriprise Financial | Lowland Investment vs. AcadeMedia AB |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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