Correlation Between JD Sports and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both JD Sports and Hooker Furniture 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 Hooker Furniture 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 Hooker Furniture, you can compare the effects of market volatilities on JD Sports and Hooker Furniture 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 Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Hooker Furniture.
Diversification Opportunities for JD Sports and Hooker Furniture
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JDDSF and Hooker is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture 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 Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of JD Sports i.e., JD Sports and Hooker Furniture go up and down completely randomly.
Pair Corralation between JD Sports and Hooker Furniture
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Hooker Furniture. But the pink sheet apears to be less risky and, when comparing its historical volatility, JD Sports Fashion is 1.08 times less risky than Hooker Furniture. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Hooker Furniture is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,325 in Hooker Furniture on November 18, 2024 and sell it today you would lose (13.00) from holding Hooker Furniture or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Hooker Furniture
Performance |
| Timeline |
| JD Sports Fashion |
| Hooker Furniture |
JD Sports and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Hooker Furniture
The main advantage of trading using opposite JD Sports and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Hooker Furniture 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 Hooker Furniture will offset losses from the drop in Hooker Furniture's long position.The idea behind JD Sports Fashion and Hooker Furniture 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.| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Natuzzi SpA | Hooker Furniture vs. Flexsteel Industries | Hooker Furniture vs. Hamilton Beach Brands |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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