Correlation Between JD Sports and Software Circle
Can any of the company-specific risk be diversified away by investing in both JD Sports and Software Circle 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 Software Circle 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 Software Circle plc, you can compare the effects of market volatilities on JD Sports and Software Circle 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 Software Circle. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Software Circle.
Diversification Opportunities for JD Sports and Software Circle
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between JD Sports and Software is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Software Circle plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software Circle 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 Software Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software Circle plc has no effect on the direction of JD Sports i.e., JD Sports and Software Circle go up and down completely randomly.
Pair Corralation between JD Sports and Software Circle
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Software Circle. In addition to that, JD Sports is 1.78 times more volatile than Software Circle plc. It trades about -0.1 of its total potential returns per unit of risk. Software Circle plc is currently generating about 0.19 per unit of volatility. If you would invest 1,700 in Software Circle plc on October 25, 2024 and sell it today you would earn a total of 800.00 from holding Software Circle plc or generate 47.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Software Circle plc
Performance |
| Timeline |
| JD Sports Fashion |
| Software Circle plc |
JD Sports and Software Circle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Software Circle
The main advantage of trading using opposite JD Sports and Software Circle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Software Circle 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 Software Circle will offset losses from the drop in Software Circle's long position.| JD Sports vs. Jacquet Metal Service | JD Sports vs. Eastinco Mining Exploration | JD Sports vs. Beowulf Mining | JD Sports vs. Trainline Plc |
| Software Circle vs. DXC Technology Co | Software Circle vs. Primary Health Properties | Software Circle vs. Cardinal Health | Software Circle vs. Bellevue Healthcare Trust |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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