Correlation Between Old Dominion and JD Sports
Can any of the company-specific risk be diversified away by investing in both Old Dominion 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 Old Dominion and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Dominion Freight and JD Sports Fashion, you can compare the effects of market volatilities on Old Dominion 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 Old Dominion with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and JD Sports.
Diversification Opportunities for Old Dominion and JD Sports
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Old and JDDSF is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight 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 Old Dominion 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 Old Dominion Freight 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 Old Dominion i.e., Old Dominion and JD Sports go up and down completely randomly.
Pair Corralation between Old Dominion and JD Sports
Given the investment horizon of 90 days Old Dominion Freight is expected to generate 0.76 times more return on investment than JD Sports. However, Old Dominion Freight is 1.32 times less risky than JD Sports. It trades about 0.16 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.21 per unit of risk. If you would invest 20,382 in Old Dominion Freight on August 31, 2024 and sell it today you would earn a total of 2,029 from holding Old Dominion Freight or generate 9.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Dominion Freight vs. JD Sports Fashion
Performance |
| Timeline |
| Old Dominion Freight |
| JD Sports Fashion |
Old Dominion and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Dominion and JD Sports
The main advantage of trading using opposite Old Dominion and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion 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.| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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