Correlation Between JD Sports and Four Seasons
Can any of the company-specific risk be diversified away by investing in both JD Sports and Four Seasons 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 Four Seasons 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 Four Seasons Education, you can compare the effects of market volatilities on JD Sports and Four Seasons 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 Four Seasons. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Four Seasons.
Diversification Opportunities for JD Sports and Four Seasons
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JDSPY and Four is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Four Seasons Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Seasons Education 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 Four Seasons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Seasons Education has no effect on the direction of JD Sports i.e., JD Sports and Four Seasons go up and down completely randomly.
Pair Corralation between JD Sports and Four Seasons
Assuming the 90 days horizon JD Sports Fashion is expected to generate 0.38 times more return on investment than Four Seasons. However, JD Sports Fashion is 2.6 times less risky than Four Seasons. It trades about -0.18 of its potential returns per unit of risk. Four Seasons Education is currently generating about -0.13 per unit of risk. If you would invest 104.00 in JD Sports Fashion on December 1, 2024 and sell it today you would lose (10.00) from holding JD Sports Fashion or give up 9.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Four Seasons Education
Performance |
| Timeline |
| JD Sports Fashion |
| Four Seasons Education |
JD Sports and Four Seasons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Four Seasons
The main advantage of trading using opposite JD Sports and Four Seasons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Four Seasons 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 Four Seasons will offset losses from the drop in Four Seasons' long position.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
| Four Seasons vs. Wah Fu Education | Four Seasons vs. Sunlands Technology Group | Four Seasons vs. 51Talk Online Education | Four Seasons vs. China Liberal Education |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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