Correlation Between JD Sports and Apogee Enterprises
Can any of the company-specific risk be diversified away by investing in both JD Sports and Apogee Enterprises 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 Apogee Enterprises 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 Apogee Enterprises, you can compare the effects of market volatilities on JD Sports and Apogee Enterprises 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 Apogee Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Apogee Enterprises.
Diversification Opportunities for JD Sports and Apogee Enterprises
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JDDSF and Apogee is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Apogee Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apogee Enterprises 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 Apogee Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apogee Enterprises has no effect on the direction of JD Sports i.e., JD Sports and Apogee Enterprises go up and down completely randomly.
Pair Corralation between JD Sports and Apogee Enterprises
Assuming the 90 days horizon JD Sports Fashion is expected to generate 1.18 times more return on investment than Apogee Enterprises. However, JD Sports is 1.18 times more volatile than Apogee Enterprises. It trades about -0.22 of its potential returns per unit of risk. Apogee Enterprises is currently generating about -0.3 per unit of risk. If you would invest 117.00 in JD Sports Fashion on November 18, 2024 and sell it today you would lose (11.00) from holding JD Sports Fashion or give up 9.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Apogee Enterprises
Performance |
| Timeline |
| JD Sports Fashion |
| Apogee Enterprises |
JD Sports and Apogee Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Apogee Enterprises
The main advantage of trading using opposite JD Sports and Apogee Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Apogee Enterprises 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 Apogee Enterprises will offset losses from the drop in Apogee Enterprises' long position.The idea behind JD Sports Fashion and Apogee Enterprises 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.| Apogee Enterprises vs. Quanex Building Products | Apogee Enterprises vs. Janus International Group | Apogee Enterprises vs. Interface | Apogee Enterprises vs. Azek Company |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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