Correlation Between JD Sports and Sonos
Can any of the company-specific risk be diversified away by investing in both JD Sports and Sonos 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 Sonos 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 Sonos Inc, you can compare the effects of market volatilities on JD Sports and Sonos 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 Sonos. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Sonos.
Diversification Opportunities for JD Sports and Sonos
Excellent diversification
The 3 months correlation between JDSPY and Sonos is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc 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 Sonos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonos Inc has no effect on the direction of JD Sports i.e., JD Sports and Sonos go up and down completely randomly.
Pair Corralation between JD Sports and Sonos
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Sonos. In addition to that, JD Sports is 1.95 times more volatile than Sonos Inc. It trades about -0.16 of its total potential returns per unit of risk. Sonos Inc is currently generating about 0.09 per unit of volatility. If you would invest 1,298 in Sonos Inc on August 30, 2024 and sell it today you would earn a total of 66.00 from holding Sonos Inc or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
JD Sports Fashion vs. Sonos Inc
Performance |
| Timeline |
| JD Sports Fashion |
| Sonos Inc |
JD Sports and Sonos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Sonos
The main advantage of trading using opposite JD Sports and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Sonos 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 Sonos will offset losses from the drop in Sonos' long position.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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