Correlation Between JD Sports and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both JD Sports and Emerson Radio 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 Emerson Radio 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 Emerson Radio, you can compare the effects of market volatilities on JD Sports and Emerson Radio 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 Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Emerson Radio.
Diversification Opportunities for JD Sports and Emerson Radio
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JDDSF and Emerson is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of JD Sports i.e., JD Sports and Emerson Radio go up and down completely randomly.
Pair Corralation between JD Sports and Emerson Radio
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Emerson Radio. In addition to that, JD Sports is 1.23 times more volatile than Emerson Radio. It trades about -0.21 of its total potential returns per unit of risk. Emerson Radio is currently generating about -0.2 per unit of volatility. If you would invest 50.00 in Emerson Radio on August 30, 2024 and sell it today you would lose (7.00) from holding Emerson Radio or give up 14.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Emerson Radio
Performance |
| Timeline |
| JD Sports Fashion |
| Emerson Radio |
JD Sports and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Emerson Radio
The main advantage of trading using opposite JD Sports and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
| Emerson Radio vs. VOXX International | Emerson Radio vs. LG Display Co | Emerson Radio vs. Turtle Beach Corp | Emerson Radio vs. Koss Corporation |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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