Correlation Between JD and Lands End
Can any of the company-specific risk be diversified away by investing in both JD and Lands End 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 and Lands End into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD Inc Adr and Lands End, you can compare the effects of market volatilities on JD and Lands End 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 with a short position of Lands End. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD and Lands End.
Diversification Opportunities for JD and Lands End
Poor diversification
The 3 months correlation between JD and Lands is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc Adr and Lands End in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lands End and JD 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 Inc Adr are associated (or correlated) with Lands End. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lands End has no effect on the direction of JD i.e., JD and Lands End go up and down completely randomly.
Pair Corralation between JD and Lands End
Allowing for the 90-day total investment horizon JD Inc Adr is expected to under-perform the Lands End. But the stock apears to be less risky and, when comparing its historical volatility, JD Inc Adr is 1.31 times less risky than Lands End. The stock trades about -0.01 of its potential returns per unit of risk. The Lands End is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 881.00 in Lands End on October 20, 2024 and sell it today you would earn a total of 424.00 from holding Lands End or generate 48.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Inc Adr vs. Lands End
Performance |
| Timeline |
| JD Inc Adr |
| Lands End |
JD and Lands End Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD and Lands End
The main advantage of trading using opposite JD and Lands End positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD position performs unexpectedly, Lands End 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 Lands End will offset losses from the drop in Lands End's long position.The idea behind JD Inc Adr and Lands End pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lands End vs. Tillys Inc | Lands End vs. Zumiez Inc | Lands End vs. Citi Trends | Lands End vs. Cato Corporation |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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