Correlation Between JD Sports and Marchex
Can any of the company-specific risk be diversified away by investing in both JD Sports and Marchex 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 Marchex 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 Marchex, you can compare the effects of market volatilities on JD Sports and Marchex 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 Marchex. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Marchex.
Diversification Opportunities for JD Sports and Marchex
Good diversification
The 3 months correlation between JDDSF and Marchex is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Marchex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marchex 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 Marchex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marchex has no effect on the direction of JD Sports i.e., JD Sports and Marchex go up and down completely randomly.
Pair Corralation between JD Sports and Marchex
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Marchex. But the pink sheet apears to be less risky and, when comparing its historical volatility, JD Sports Fashion is 1.46 times less risky than Marchex. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Marchex is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 197.00 in Marchex on August 27, 2024 and sell it today you would lose (32.00) from holding Marchex or give up 16.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Marchex
Performance |
| Timeline |
| JD Sports Fashion |
| Marchex |
JD Sports and Marchex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Marchex
The main advantage of trading using opposite JD Sports and Marchex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Marchex 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 Marchex will offset losses from the drop in Marchex's long position.The idea behind JD Sports Fashion and Marchex 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.| Marchex vs. Entravision Communications | Marchex vs. Direct Digital Holdings | Marchex vs. Cimpress NV | Marchex vs. Townsquare Media |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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