Correlation Between JD Sports and Intrepid Metals
Can any of the company-specific risk be diversified away by investing in both JD Sports and Intrepid Metals 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 Intrepid Metals 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 Intrepid Metals Corp, you can compare the effects of market volatilities on JD Sports and Intrepid Metals 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 Intrepid Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Intrepid Metals.
Diversification Opportunities for JD Sports and Intrepid Metals
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JDDSF and Intrepid is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Intrepid Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrepid Metals Corp 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 Intrepid Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrepid Metals Corp has no effect on the direction of JD Sports i.e., JD Sports and Intrepid Metals go up and down completely randomly.
Pair Corralation between JD Sports and Intrepid Metals
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Intrepid Metals. But the pink sheet apears to be less risky and, when comparing its historical volatility, JD Sports Fashion is 3.64 times less risky than Intrepid Metals. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Intrepid Metals Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Intrepid Metals Corp on November 27, 2024 and sell it today you would earn a total of 18.00 from holding Intrepid Metals Corp or generate 138.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Intrepid Metals Corp
Performance |
| Timeline |
| JD Sports Fashion |
| Intrepid Metals Corp |
JD Sports and Intrepid Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Intrepid Metals
The main advantage of trading using opposite JD Sports and Intrepid Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Intrepid Metals 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 Intrepid Metals will offset losses from the drop in Intrepid Metals' long position.The idea behind JD Sports Fashion and Intrepid Metals Corp 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.| Intrepid Metals vs. Infosys Ltd ADR | Intrepid Metals vs. Arcos Dorados Holdings | Intrepid Metals vs. Data3 Limited | Intrepid Metals vs. NetSol Technologies |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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