Correlation Between Monks Investment and JD Sports
Can any of the company-specific risk be diversified away by investing in both Monks Investment and JD Sports 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 Monks Investment and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monks Investment Trust and JD Sports Fashion, you can compare the effects of market volatilities on Monks Investment and JD Sports 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 Monks Investment with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and JD Sports.
Diversification Opportunities for Monks Investment and JD Sports
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Monks and JD Sports is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion and Monks Investment 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 Monks Investment Trust are associated (or correlated) with JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Monks Investment i.e., Monks Investment and JD Sports go up and down completely randomly.
Pair Corralation between Monks Investment and JD Sports
Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.29 times more return on investment than JD Sports. However, Monks Investment Trust is 3.43 times less risky than JD Sports. It trades about 0.21 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.24 per unit of risk. If you would invest 118,200 in Monks Investment Trust on October 26, 2024 and sell it today you would earn a total of 14,400 from holding Monks Investment Trust or generate 12.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monks Investment Trust vs. JD Sports Fashion
Performance |
| Timeline |
| Monks Investment Trust |
| JD Sports Fashion |
Monks Investment and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monks Investment and JD Sports
The main advantage of trading using opposite Monks Investment and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| Monks Investment vs. SupplyMe Capital PLC | Monks Investment vs. Premier African Minerals | Monks Investment vs. SANTANDER UK 8 | Monks Investment vs. Tower Resources plc |
| JD Sports vs. Hollywood Bowl Group | JD Sports vs. Ubisoft Entertainment | JD Sports vs. Axway Software SA | JD Sports vs. Live Nation Entertainment |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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