Correlation Between JD Sports and Marchex
Can any of the company-specific risk be diversified away by investing in both JD Sports and Marchex 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 Marchex 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 Marchex, you can compare the effects of market volatilities on JD Sports and Marchex 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 Marchex. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Marchex.
Diversification Opportunities for JD Sports and Marchex
Weak diversification
The 3 months correlation between JDSPY and Marchex is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Marchex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marchex 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 Marchex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marchex has no effect on the direction of JD Sports i.e., JD Sports and Marchex go up and down completely randomly.
Pair Corralation between JD Sports and Marchex
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Marchex. In addition to that, JD Sports is 1.15 times more volatile than Marchex. It trades about -0.04 of its total potential returns per unit of risk. Marchex is currently generating about 0.08 per unit of volatility. If you would invest 138.00 in Marchex on September 1, 2024 and sell it today you would earn a total of 44.00 from holding Marchex or generate 31.88% 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. Marchex
Performance |
| Timeline |
| JD Sports Fashion |
| Marchex |
JD Sports and Marchex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Marchex
The main advantage of trading using opposite JD Sports and Marchex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Marchex 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 Marchex will offset losses from the drop in Marchex's long position.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
| Marchex vs. Entravision Communications | Marchex vs. Direct Digital Holdings | Marchex vs. Cimpress NV | Marchex vs. Townsquare Media |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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