Correlation Between JD Sports and 25160PAE7

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Can any of the company-specific risk be diversified away by investing in both JD Sports and 25160PAE7 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 25160PAE7 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 DEUTSCHE BK AG, you can compare the effects of market volatilities on JD Sports and 25160PAE7 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 25160PAE7. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and 25160PAE7.

Diversification Opportunities for JD Sports and 25160PAE7

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between JDDSF and 25160PAE7 is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and DEUTSCHE BK AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE BK AG 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 25160PAE7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE BK AG has no effect on the direction of JD Sports i.e., JD Sports and 25160PAE7 go up and down completely randomly.

Pair Corralation between JD Sports and 25160PAE7

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the 25160PAE7. In addition to that, JD Sports is 5.61 times more volatile than DEUTSCHE BK AG. It trades about -0.22 of its total potential returns per unit of risk. DEUTSCHE BK AG is currently generating about -0.16 per unit of volatility. If you would invest  10,098  in DEUTSCHE BK AG on October 30, 2024 and sell it today you would lose (256.00) from holding DEUTSCHE BK AG or give up 2.54% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy65.79%
ValuesDaily Returns

JD Sports Fashion  vs.  DEUTSCHE BK AG

 Performance 
       Timeline  
JD Sports Fashion 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
DEUTSCHE BK AG 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DEUTSCHE BK AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 25160PAE7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JD Sports and 25160PAE7 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JD Sports and 25160PAE7

The main advantage of trading using opposite JD Sports and 25160PAE7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, 25160PAE7 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 25160PAE7 will offset losses from the drop in 25160PAE7's long position.
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The idea behind JD Sports Fashion and DEUTSCHE BK AG 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.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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