Correlation Between JD Sports and Proficient Auto
Can any of the company-specific risk be diversified away by investing in both JD Sports and Proficient Auto 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 Proficient Auto 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 Proficient Auto Logistics,, you can compare the effects of market volatilities on JD Sports and Proficient Auto 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 Proficient Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Proficient Auto.
Diversification Opportunities for JD Sports and Proficient Auto
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JDSPY and Proficient is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Proficient Auto Logistics, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proficient Auto Logi 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 Proficient Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proficient Auto Logi has no effect on the direction of JD Sports i.e., JD Sports and Proficient Auto go up and down completely randomly.
Pair Corralation between JD Sports and Proficient Auto
Assuming the 90 days horizon JD Sports Fashion is expected to generate 1.25 times more return on investment than Proficient Auto. However, JD Sports is 1.25 times more volatile than Proficient Auto Logistics,. It trades about 0.01 of its potential returns per unit of risk. Proficient Auto Logistics, is currently generating about -0.06 per unit of risk. If you would invest 153.00 in JD Sports Fashion on September 14, 2024 and sell it today you would lose (24.00) from holding JD Sports Fashion or give up 15.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 30.57% |
| Values | Daily Returns |
JD Sports Fashion vs. Proficient Auto Logistics,
Performance |
| Timeline |
| JD Sports Fashion |
| Proficient Auto Logi |
JD Sports and Proficient Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Proficient Auto
The main advantage of trading using opposite JD Sports and Proficient Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Proficient Auto 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 Proficient Auto will offset losses from the drop in Proficient Auto's long position.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
| Proficient Auto vs. Apogee Enterprises | Proficient Auto vs. Saia Inc | Proficient Auto vs. Yuexiu Transport Infrastructure | Proficient Auto vs. JD Sports Fashion |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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