Correlation Between JD Sports and Monks Investment
Can any of the company-specific risk be diversified away by investing in both JD Sports and Monks 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 Monks 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 Monks Investment Trust, you can compare the effects of market volatilities on JD Sports and Monks 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 Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Monks Investment.
Diversification Opportunities for JD Sports and Monks Investment
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between JD Sports and Monks is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Monks Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monks 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 Monks Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monks Investment Trust has no effect on the direction of JD Sports i.e., JD Sports and Monks Investment go up and down completely randomly.
Pair Corralation between JD Sports and Monks Investment
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Monks Investment. In addition to that, JD Sports is 3.43 times more volatile than Monks Investment Trust. It trades about -0.24 of its total potential returns per unit of risk. Monks Investment Trust is currently generating about 0.21 per unit of volatility. If you would invest 118,200 in Monks Investment Trust on October 26, 2024 and sell it today you would earn a total of 14,400 from holding Monks Investment Trust or generate 12.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Monks Investment Trust
Performance |
| Timeline |
| JD Sports Fashion |
| Monks Investment Trust |
JD Sports and Monks Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Monks Investment
The main advantage of trading using opposite JD Sports and Monks Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Monks 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 Monks Investment will offset losses from the drop in Monks Investment's long position.| JD Sports vs. Hollywood Bowl Group | JD Sports vs. Ubisoft Entertainment | JD Sports vs. Axway Software SA | JD Sports vs. Live Nation Entertainment |
| Monks Investment vs. SupplyMe Capital PLC | Monks Investment vs. Premier African Minerals | Monks Investment vs. SANTANDER UK 8 | Monks Investment vs. Tower Resources plc |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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