Correlation Between JD Sports and Universal Display
Can any of the company-specific risk be diversified away by investing in both JD Sports and Universal Display 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 Universal Display 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 Universal Display, you can compare the effects of market volatilities on JD Sports and Universal Display 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 Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Universal Display.
Diversification Opportunities for JD Sports and Universal Display
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JDSPY and Universal is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display 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 Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display has no effect on the direction of JD Sports i.e., JD Sports and Universal Display go up and down completely randomly.
Pair Corralation between JD Sports and Universal Display
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Universal Display. In addition to that, JD Sports is 3.6 times more volatile than Universal Display. It trades about -0.12 of its total potential returns per unit of risk. Universal Display is currently generating about -0.25 per unit of volatility. If you would invest 18,032 in Universal Display on September 1, 2024 and sell it today you would lose (1,580) from holding Universal Display or give up 8.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Universal Display
Performance |
| Timeline |
| JD Sports Fashion |
| Universal Display |
JD Sports and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Universal Display
The main advantage of trading using opposite JD Sports and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Universal Display 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 Universal Display will offset losses from the drop in Universal Display's long position.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
| Universal Display vs. Plexus Corp | Universal Display vs. Methode Electronics | Universal Display vs. Benchmark Electronics | Universal Display vs. Bel Fuse A |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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