Correlation Between JD Sports and United Guardian
Can any of the company-specific risk be diversified away by investing in both JD Sports and United Guardian 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 United Guardian 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 United Guardian, you can compare the effects of market volatilities on JD Sports and United Guardian 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 United Guardian. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and United Guardian.
Diversification Opportunities for JD Sports and United Guardian
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JDSPY and United is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and United Guardian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Guardian 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 United Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Guardian has no effect on the direction of JD Sports i.e., JD Sports and United Guardian go up and down completely randomly.
Pair Corralation between JD Sports and United Guardian
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the United Guardian. In addition to that, JD Sports is 1.5 times more volatile than United Guardian. It trades about -0.3 of its total potential returns per unit of risk. United Guardian is currently generating about -0.42 per unit of volatility. If you would invest 1,358 in United Guardian on August 28, 2024 and sell it today you would lose (382.00) from holding United Guardian or give up 28.13% 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. United Guardian
Performance |
| Timeline |
| JD Sports Fashion |
| United Guardian |
JD Sports and United Guardian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and United Guardian
The main advantage of trading using opposite JD Sports and United Guardian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, United Guardian 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 United Guardian will offset losses from the drop in United Guardian's long position.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
| United Guardian vs. Utah Medical Products | United Guardian vs. Union Bankshares | United Guardian vs. Psychemedics | United Guardian vs. Unity Bancorp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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