Correlation Between JD Sports and United States
Can any of the company-specific risk be diversified away by investing in both JD Sports and United States 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 States 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 States Steel, you can compare the effects of market volatilities on JD Sports and United States 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 States. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and United States.
Diversification Opportunities for JD Sports and United States
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JDSPY and United is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of JD Sports i.e., JD Sports and United States go up and down completely randomly.
Pair Corralation between JD Sports and United States
Assuming the 90 days horizon JD Sports is expected to generate 1.41 times less return on investment than United States. In addition to that, JD Sports is 1.5 times more volatile than United States Steel. It trades about 0.02 of its total potential returns per unit of risk. United States Steel is currently generating about 0.05 per unit of volatility. If you would invest 2,509 in United States Steel on August 30, 2024 and sell it today you would earn a total of 1,536 from holding United States Steel or generate 61.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. United States Steel
Performance |
| Timeline |
| JD Sports Fashion |
| United States Steel |
JD Sports and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and United States
The main advantage of trading using opposite JD Sports and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, United States 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 States will offset losses from the drop in United States' long position.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
| United States vs. Nucor Corp | United States vs. Steel Dynamics | United States vs. ArcelorMittal SA ADR | United States vs. Gerdau SA ADR |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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