Correlation Between JD Sports and Otsuka
Can any of the company-specific risk be diversified away by investing in both JD Sports and Otsuka 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 Otsuka 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 Otsuka, you can compare the effects of market volatilities on JD Sports and Otsuka 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 Otsuka. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Otsuka.
Diversification Opportunities for JD Sports and Otsuka
Significant diversification
The 3 months correlation between JDDSF and Otsuka is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Otsuka in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otsuka 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 Otsuka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otsuka has no effect on the direction of JD Sports i.e., JD Sports and Otsuka go up and down completely randomly.
Pair Corralation between JD Sports and Otsuka
Assuming the 90 days horizon JD Sports Fashion is expected to generate 0.42 times more return on investment than Otsuka. However, JD Sports Fashion is 2.38 times less risky than Otsuka. It trades about 0.03 of its potential returns per unit of risk. Otsuka is currently generating about -0.06 per unit of risk. If you would invest 109.00 in JD Sports Fashion on September 14, 2024 and sell it today you would earn a total of 37.00 from holding JD Sports Fashion or generate 33.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 29.15% |
| Values | Daily Returns |
JD Sports Fashion vs. Otsuka
Performance |
| Timeline |
| JD Sports Fashion |
| Otsuka |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
JD Sports and Otsuka Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Otsuka
The main advantage of trading using opposite JD Sports and Otsuka positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Otsuka 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 Otsuka will offset losses from the drop in Otsuka's long position.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
| Otsuka vs. Canlan Ice Sports | Otsuka vs. JD Sports Fashion | Otsuka vs. Catalyst Pharmaceuticals | Otsuka vs. Xponential Fitness |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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