Correlation Between JD Sports and Neometals
Can any of the company-specific risk be diversified away by investing in both JD Sports and Neometals 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 Neometals 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 Neometals, you can compare the effects of market volatilities on JD Sports and Neometals 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 Neometals. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Neometals.
Diversification Opportunities for JD Sports and Neometals
Significant diversification
The 3 months correlation between JD Sports and Neometals is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of JD Sports i.e., JD Sports and Neometals go up and down completely randomly.
Pair Corralation between JD Sports and Neometals
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Neometals. In addition to that, JD Sports is 1.34 times more volatile than Neometals. It trades about -0.14 of its total potential returns per unit of risk. Neometals is currently generating about -0.14 per unit of volatility. If you would invest 475.00 in Neometals on September 12, 2024 and sell it today you would lose (50.00) from holding Neometals or give up 10.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Neometals
Performance |
| Timeline |
| JD Sports Fashion |
| Neometals |
JD Sports and Neometals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Neometals
The main advantage of trading using opposite JD Sports and Neometals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Neometals 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 Neometals will offset losses from the drop in Neometals' long position.| JD Sports vs. National Atomic Co | JD Sports vs. OTP Bank Nyrt | JD Sports vs. Samsung Electronics Co | JD Sports vs. Samsung Electronics Co |
| Neometals vs. Givaudan SA | Neometals vs. Antofagasta PLC | Neometals vs. Ferrexpo PLC | Neometals vs. Atalaya Mining |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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