Correlation Between JD Sports and Seed Innovations
Can any of the company-specific risk be diversified away by investing in both JD Sports and Seed Innovations 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 Seed Innovations 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 Seed Innovations, you can compare the effects of market volatilities on JD Sports and Seed Innovations 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 Seed Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Seed Innovations.
Diversification Opportunities for JD Sports and Seed Innovations
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JD Sports and Seed is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Seed Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seed Innovations 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 Seed Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seed Innovations has no effect on the direction of JD Sports i.e., JD Sports and Seed Innovations go up and down completely randomly.
Pair Corralation between JD Sports and Seed Innovations
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Seed Innovations. In addition to that, JD Sports is 2.09 times more volatile than Seed Innovations. It trades about -0.24 of its total potential returns per unit of risk. Seed Innovations is currently generating about 0.22 per unit of volatility. If you would invest 160.00 in Seed Innovations on October 25, 2024 and sell it today you would earn a total of 10.00 from holding Seed Innovations or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Seed Innovations
Performance |
| Timeline |
| JD Sports Fashion |
| Seed Innovations |
JD Sports and Seed Innovations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Seed Innovations
The main advantage of trading using opposite JD Sports and Seed Innovations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Seed Innovations 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 Seed Innovations will offset losses from the drop in Seed Innovations' long position.| JD Sports vs. Jacquet Metal Service | JD Sports vs. Eastinco Mining Exploration | JD Sports vs. Beowulf Mining | JD Sports vs. Trainline Plc |
| Seed Innovations vs. Ameriprise Financial | Seed Innovations vs. Commerzbank AG | Seed Innovations vs. Raymond James Financial | Seed Innovations vs. JD Sports Fashion |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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