Correlation Between JD Sports and Postal Realty
Can any of the company-specific risk be diversified away by investing in both JD Sports and Postal Realty 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 Postal Realty 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 Postal Realty Trust, you can compare the effects of market volatilities on JD Sports and Postal Realty 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 Postal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Postal Realty.
Diversification Opportunities for JD Sports and Postal Realty
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between JDDSF and Postal is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Postal Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Realty Trust 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 Postal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Realty Trust has no effect on the direction of JD Sports i.e., JD Sports and Postal Realty go up and down completely randomly.
Pair Corralation between JD Sports and Postal Realty
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Postal Realty. In addition to that, JD Sports is 3.04 times more volatile than Postal Realty Trust. It trades about -0.21 of its total potential returns per unit of risk. Postal Realty Trust is currently generating about -0.04 per unit of volatility. If you would invest 1,432 in Postal Realty Trust on August 30, 2024 and sell it today you would lose (20.00) from holding Postal Realty Trust or give up 1.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Postal Realty Trust
Performance |
| Timeline |
| JD Sports Fashion |
| Postal Realty Trust |
JD Sports and Postal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Postal Realty
The main advantage of trading using opposite JD Sports and Postal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Postal Realty 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 Postal Realty will offset losses from the drop in Postal Realty's long position.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
| Postal Realty vs. Office Properties Income | Postal Realty vs. SL Green Realty | Postal Realty vs. Highwoods Properties | Postal Realty vs. Equity Commonwealth |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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