Correlation Between JD Sports and Ameren Illinois
Can any of the company-specific risk be diversified away by investing in both JD Sports and Ameren Illinois 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 Ameren Illinois 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 Ameren Illinois, you can compare the effects of market volatilities on JD Sports and Ameren Illinois 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 Ameren Illinois. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Ameren Illinois.
Diversification Opportunities for JD Sports and Ameren Illinois
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JDSPY and Ameren is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Ameren Illinois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameren Illinois 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 Ameren Illinois. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameren Illinois has no effect on the direction of JD Sports i.e., JD Sports and Ameren Illinois go up and down completely randomly.
Pair Corralation between JD Sports and Ameren Illinois
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Ameren Illinois. In addition to that, JD Sports is 3.09 times more volatile than Ameren Illinois. It trades about -0.02 of its total potential returns per unit of risk. Ameren Illinois is currently generating about 0.0 per unit of volatility. If you would invest 6,505 in Ameren Illinois on October 7, 2024 and sell it today you would lose (25.00) from holding Ameren Illinois or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Ameren Illinois
Performance |
| Timeline |
| JD Sports Fashion |
| Ameren Illinois |
JD Sports and Ameren Illinois Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Ameren Illinois
The main advantage of trading using opposite JD Sports and Ameren Illinois positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Ameren Illinois 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 Ameren Illinois will offset losses from the drop in Ameren Illinois' long position.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
| Ameren Illinois vs. Interpublic Group of | Ameren Illinois vs. 51Talk Online Education | Ameren Illinois vs. WPP PLC ADR | Ameren Illinois vs. Coupang LLC |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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