Correlation Between JD Sports and Interactive Brokers
Can any of the company-specific risk be diversified away by investing in both JD Sports and Interactive Brokers 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 Interactive Brokers 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 Interactive Brokers Group, you can compare the effects of market volatilities on JD Sports and Interactive Brokers 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 Interactive Brokers. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Interactive Brokers.
Diversification Opportunities for JD Sports and Interactive Brokers
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between JDSPY and Interactive is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Interactive Brokers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Brokers 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 Interactive Brokers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Brokers has no effect on the direction of JD Sports i.e., JD Sports and Interactive Brokers go up and down completely randomly.
Pair Corralation between JD Sports and Interactive Brokers
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Interactive Brokers. In addition to that, JD Sports is 2.16 times more volatile than Interactive Brokers Group. It trades about -0.16 of its total potential returns per unit of risk. Interactive Brokers Group is currently generating about 0.41 per unit of volatility. If you would invest 15,238 in Interactive Brokers Group on September 1, 2024 and sell it today you would earn a total of 3,871 from holding Interactive Brokers Group or generate 25.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Interactive Brokers Group
Performance |
| Timeline |
| JD Sports Fashion |
| Interactive Brokers |
JD Sports and Interactive Brokers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Interactive Brokers
The main advantage of trading using opposite JD Sports and Interactive Brokers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Interactive Brokers 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 Interactive Brokers will offset losses from the drop in Interactive Brokers' long position.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
| Interactive Brokers vs. Live Ventures | Interactive Brokers vs. Bassett Furniture Industries | Interactive Brokers vs. Haverty Furniture Companies | Interactive Brokers vs. Vera Bradley |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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