Correlation Between JD Sports and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both JD Sports and Finnair Oyj 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 Finnair Oyj 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 Finnair Oyj, you can compare the effects of market volatilities on JD Sports and Finnair Oyj 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 Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Finnair Oyj.
Diversification Opportunities for JD Sports and Finnair Oyj
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between JDDSF and Finnair is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj 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 Finnair Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finnair Oyj has no effect on the direction of JD Sports i.e., JD Sports and Finnair Oyj go up and down completely randomly.
Pair Corralation between JD Sports and Finnair Oyj
Assuming the 90 days horizon JD Sports Fashion is expected to generate 1.41 times more return on investment than Finnair Oyj. However, JD Sports is 1.41 times more volatile than Finnair Oyj. It trades about 0.03 of its potential returns per unit of risk. Finnair Oyj is currently generating about -0.12 per unit of risk. If you would invest 139.00 in JD Sports Fashion on September 2, 2024 and sell it today you would earn a total of 7.00 from holding JD Sports Fashion or generate 5.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
JD Sports Fashion vs. Finnair Oyj
Performance |
| Timeline |
| JD Sports Fashion |
| Finnair Oyj |
JD Sports and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Finnair Oyj
The main advantage of trading using opposite JD Sports and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Finnair Oyj 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 Finnair Oyj will offset losses from the drop in Finnair Oyj's long position.The idea behind JD Sports Fashion and Finnair Oyj 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.| Finnair Oyj vs. easyJet plc | Finnair Oyj vs. Norse Atlantic ASA | Finnair Oyj vs. Air New Zealand | Finnair Oyj vs. Air China Limited |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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