Correlation Between JD Sports and HE Equipment
Can any of the company-specific risk be diversified away by investing in both JD Sports and HE Equipment 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 HE Equipment 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 HE Equipment Services, you can compare the effects of market volatilities on JD Sports and HE Equipment 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 HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and HE Equipment.
Diversification Opportunities for JD Sports and HE Equipment
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JDSPY and HEES is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services 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 HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of JD Sports i.e., JD Sports and HE Equipment go up and down completely randomly.
Pair Corralation between JD Sports and HE Equipment
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the HE Equipment. In addition to that, JD Sports is 1.6 times more volatile than HE Equipment Services. It trades about -0.19 of its total potential returns per unit of risk. HE Equipment Services is currently generating about 0.02 per unit of volatility. If you would invest 4,845 in HE Equipment Services on September 29, 2024 and sell it today you would earn a total of 97.00 from holding HE Equipment Services or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. HE Equipment Services
Performance |
| Timeline |
| JD Sports Fashion |
| HE Equipment Services |
JD Sports and HE Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and HE Equipment
The main advantage of trading using opposite JD Sports and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment's long position.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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