Correlation Between JD Sports and Pets At
Can any of the company-specific risk be diversified away by investing in both JD Sports and Pets At 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 Pets At 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 Pets at Home, you can compare the effects of market volatilities on JD Sports and Pets At 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 Pets At. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Pets At.
Diversification Opportunities for JD Sports and Pets At
Poor diversification
The 3 months correlation between JD Sports and Pets is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home 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 Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of JD Sports i.e., JD Sports and Pets At go up and down completely randomly.
Pair Corralation between JD Sports and Pets At
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Pets At. In addition to that, JD Sports is 1.54 times more volatile than Pets at Home. It trades about -0.04 of its total potential returns per unit of risk. Pets at Home is currently generating about -0.04 per unit of volatility. If you would invest 29,665 in Pets at Home on September 2, 2024 and sell it today you would lose (6,405) from holding Pets at Home or give up 21.59% 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. Pets at Home
Performance |
| Timeline |
| JD Sports Fashion |
| Pets at Home |
JD Sports and Pets At Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Pets At
The main advantage of trading using opposite JD Sports and Pets At positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Pets At 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 Pets At will offset losses from the drop in Pets At's long position.| JD Sports vs. Toyota Motor Corp | JD Sports vs. SoftBank Group Corp | JD Sports vs. OTP Bank Nyrt | JD Sports vs. Las Vegas Sands |
| Pets At vs. Ithaca Energy PLC | Pets At vs. SANTANDER UK 10 | Pets At vs. Coor Service Management | Pets At vs. Franklin FTSE Brazil |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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