Correlation Between JD Sports and United Utilities
Can any of the company-specific risk be diversified away by investing in both JD Sports and United Utilities 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 United Utilities 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 United Utilities Group, you can compare the effects of market volatilities on JD Sports and United Utilities 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 United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and United Utilities.
Diversification Opportunities for JD Sports and United Utilities
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JD Sports and United is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities 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 United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of JD Sports i.e., JD Sports and United Utilities go up and down completely randomly.
Pair Corralation between JD Sports and United Utilities
Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the United Utilities. In addition to that, JD Sports is 3.06 times more volatile than United Utilities Group. It trades about -0.14 of its total potential returns per unit of risk. United Utilities Group is currently generating about 0.08 per unit of volatility. If you would invest 105,322 in United Utilities Group on September 12, 2024 and sell it today you would earn a total of 2,478 from holding United Utilities Group or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. United Utilities Group
Performance |
| Timeline |
| JD Sports Fashion |
| United Utilities |
JD Sports and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and United Utilities
The main advantage of trading using opposite JD Sports and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' 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 |
| United Utilities vs. Vitec Software Group | United Utilities vs. Ecofin Global Utilities | United Utilities vs. Everyman Media Group | United Utilities vs. Catena Media PLC |
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 Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |