Correlation Between Insurance Australia and JD SPORTS
Can any of the company-specific risk be diversified away by investing in both Insurance Australia 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 Insurance Australia and JD SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insurance Australia Group and JD SPORTS FASH, you can compare the effects of market volatilities on Insurance Australia 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 Insurance Australia with a short position of JD SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and JD SPORTS.
Diversification Opportunities for Insurance Australia and JD SPORTS
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Insurance and 9JD is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and JD SPORTS FASH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD SPORTS FASH and Insurance Australia 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 Insurance Australia Group 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 FASH has no effect on the direction of Insurance Australia i.e., Insurance Australia and JD SPORTS go up and down completely randomly.
Pair Corralation between Insurance Australia and JD SPORTS
Assuming the 90 days horizon Insurance Australia Group is expected to generate 0.62 times more return on investment than JD SPORTS. However, Insurance Australia Group is 1.62 times less risky than JD SPORTS. It trades about 0.22 of its potential returns per unit of risk. JD SPORTS FASH is currently generating about -0.4 per unit of risk. If you would invest 450.00 in Insurance Australia Group on August 29, 2024 and sell it today you would earn a total of 50.00 from holding Insurance Australia Group or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. JD SPORTS FASH
Performance |
| Timeline |
| Insurance Australia |
| JD SPORTS FASH |
Insurance Australia and JD SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and JD SPORTS
The main advantage of trading using opposite Insurance Australia and JD SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia 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's long position.| Insurance Australia vs. PICC Property and | Insurance Australia vs. QBE Insurance Group | Insurance Australia vs. Superior Plus Corp | Insurance Australia vs. SIVERS SEMICONDUCTORS AB |
| JD SPORTS vs. DICKS Sporting Goods | JD SPORTS vs. Sporting Clube de | JD SPORTS vs. Sporttotal AG | JD SPORTS vs. Transportadora de Gas |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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