Correlation Between JD Sports and PureTech Health
Can any of the company-specific risk be diversified away by investing in both JD Sports and PureTech Health 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 PureTech Health 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 PureTech Health plc, you can compare the effects of market volatilities on JD Sports and PureTech Health 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 PureTech Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and PureTech Health.
Diversification Opportunities for JD Sports and PureTech Health
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JD Sports and PureTech is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and PureTech Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureTech Health plc 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 PureTech Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PureTech Health plc has no effect on the direction of JD Sports i.e., JD Sports and PureTech Health go up and down completely randomly.
Pair Corralation between JD Sports and PureTech Health
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the PureTech Health. In addition to that, JD Sports is 1.56 times more volatile than PureTech Health plc. It trades about -0.13 of its total potential returns per unit of risk. PureTech Health plc is currently generating about 0.0 per unit of volatility. If you would invest 15,060 in PureTech Health plc on November 5, 2024 and sell it today you would lose (80.00) from holding PureTech Health plc or give up 0.53% 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. PureTech Health plc
Performance |
| Timeline |
| JD Sports Fashion |
| PureTech Health plc |
JD Sports and PureTech Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and PureTech Health
The main advantage of trading using opposite JD Sports and PureTech Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, PureTech Health 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 PureTech Health will offset losses from the drop in PureTech Health's long position.| JD Sports vs. Bytes Technology | JD Sports vs. iShares Physical Silver | JD Sports vs. Spotify Technology SA | JD Sports vs. Auction Technology Group |
| PureTech Health vs. Scandic Hotels Group | PureTech Health vs. Zoom Video Communications | PureTech Health vs. mobilezone holding AG | PureTech Health vs. Batm Advanced Communications |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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