Correlation Between JD Sports and Bank of New York
Can any of the company-specific risk be diversified away by investing in both JD Sports and Bank of New York 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 Bank of New York 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 Bank of New, you can compare the effects of market volatilities on JD Sports and Bank of New York 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 Bank of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Bank of New York.
Diversification Opportunities for JD Sports and Bank of New York
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between JDDSF and Bank is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Bank of New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of New York 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 Bank of New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of New York has no effect on the direction of JD Sports i.e., JD Sports and Bank of New York go up and down completely randomly.
Pair Corralation between JD Sports and Bank of New York
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Bank of New York. In addition to that, JD Sports is 3.68 times more volatile than Bank of New. It trades about -0.21 of its total potential returns per unit of risk. Bank of New is currently generating about 0.38 per unit of volatility. If you would invest 7,531 in Bank of New on September 2, 2024 and sell it today you would earn a total of 656.00 from holding Bank of New or generate 8.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Bank of New
Performance |
| Timeline |
| JD Sports Fashion |
| Bank of New York |
JD Sports and Bank of New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Bank of New York
The main advantage of trading using opposite JD Sports and Bank of New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Bank of New York 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 Bank of New York will offset losses from the drop in Bank of New York's long position.The idea behind JD Sports Fashion and Bank of New 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.| Bank of New York vs. Northern Trust | Bank of New York vs. Invesco Plc | Bank of New York vs. Franklin Resources | Bank of New York vs. T Rowe Price |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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