Correlation Between JD Sports and Stagwell
Can any of the company-specific risk be diversified away by investing in both JD Sports and Stagwell 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 Stagwell 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 Stagwell, you can compare the effects of market volatilities on JD Sports and Stagwell 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 Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Stagwell.
Diversification Opportunities for JD Sports and Stagwell
Very good diversification
The 3 months correlation between JDDSF and Stagwell is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of JD Sports i.e., JD Sports and Stagwell go up and down completely randomly.
Pair Corralation between JD Sports and Stagwell
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Stagwell. In addition to that, JD Sports is 1.44 times more volatile than Stagwell. It trades about -0.21 of its total potential returns per unit of risk. Stagwell is currently generating about 0.4 per unit of volatility. If you would invest 625.00 in Stagwell on August 24, 2024 and sell it today you would earn a total of 161.00 from holding Stagwell or generate 25.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Stagwell
Performance |
| Timeline |
| JD Sports Fashion |
| Stagwell |
JD Sports and Stagwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Stagwell
The main advantage of trading using opposite JD Sports and Stagwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Stagwell 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 Stagwell will offset losses from the drop in Stagwell's long position.The idea behind JD Sports Fashion and Stagwell 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.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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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