Correlation Between JD Sports and Waters
Can any of the company-specific risk be diversified away by investing in both JD Sports and Waters 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 Waters 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 Waters, you can compare the effects of market volatilities on JD Sports and Waters 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 Waters. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Waters.
Diversification Opportunities for JD Sports and Waters
Modest diversification
The 3 months correlation between JDDSF and Waters is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters 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 Waters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waters has no effect on the direction of JD Sports i.e., JD Sports and Waters go up and down completely randomly.
Pair Corralation between JD Sports and Waters
Assuming the 90 days horizon JD Sports is expected to generate 2.71 times less return on investment than Waters. In addition to that, JD Sports is 1.04 times more volatile than Waters. It trades about 0.03 of its total potential returns per unit of risk. Waters is currently generating about 0.08 per unit of volatility. If you would invest 30,762 in Waters on August 28, 2024 and sell it today you would earn a total of 7,054 from holding Waters or generate 22.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Waters
Performance |
| Timeline |
| JD Sports Fashion |
| Waters |
JD Sports and Waters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Waters
The main advantage of trading using opposite JD Sports and Waters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Waters 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 Waters will offset losses from the drop in Waters' long position.The idea behind JD Sports Fashion and Waters 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.| Waters vs. IDEXX Laboratories | Waters vs. IQVIA Holdings | Waters vs. Charles River Laboratories | Waters vs. Revvity |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |