Correlation Between JD Sports and Naked Wines
Can any of the company-specific risk be diversified away by investing in both JD Sports and Naked Wines 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 Naked Wines 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 Naked Wines plc, you can compare the effects of market volatilities on JD Sports and Naked Wines 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 Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Naked Wines.
Diversification Opportunities for JD Sports and Naked Wines
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JDSPY and Naked is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Naked Wines plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naked Wines plc 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 Naked Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naked Wines plc has no effect on the direction of JD Sports i.e., JD Sports and Naked Wines go up and down completely randomly.
Pair Corralation between JD Sports and Naked Wines
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Naked Wines. In addition to that, JD Sports is 3.34 times more volatile than Naked Wines plc. It trades about -0.11 of its total potential returns per unit of risk. Naked Wines plc is currently generating about 0.01 per unit of volatility. If you would invest 270.00 in Naked Wines plc on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Naked Wines plc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
JD Sports Fashion vs. Naked Wines plc
Performance |
| Timeline |
| JD Sports Fashion |
| Naked Wines plc |
JD Sports and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Naked Wines
The main advantage of trading using opposite JD Sports and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Naked Wines 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 Naked Wines will offset losses from the drop in Naked Wines' long position.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
| Naked Wines vs. Pernod Ricard SA | Naked Wines vs. Naked Wines plc | Naked Wines vs. Crimson Wine | Naked Wines vs. Brown Forman |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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