Correlation Between Oatly Group and JD Sports
Can any of the company-specific risk be diversified away by investing in both Oatly Group 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 Oatly Group and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oatly Group AB and JD Sports Fashion, you can compare the effects of market volatilities on Oatly Group 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 Oatly Group with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oatly Group and JD Sports.
Diversification Opportunities for Oatly Group and JD Sports
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oatly and JDSPY is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Oatly Group AB 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 Oatly Group 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 Oatly Group AB 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 Oatly Group i.e., Oatly Group and JD Sports go up and down completely randomly.
Pair Corralation between Oatly Group and JD Sports
Given the investment horizon of 90 days Oatly Group AB is expected to generate 0.73 times more return on investment than JD Sports. However, Oatly Group AB is 1.38 times less risky than JD Sports. It trades about -0.04 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.06 per unit of risk. If you would invest 76.00 in Oatly Group AB on September 12, 2024 and sell it today you would lose (4.24) from holding Oatly Group AB or give up 5.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Oatly Group AB vs. JD Sports Fashion
Performance |
| Timeline |
| Oatly Group AB |
| JD Sports Fashion |
Oatly Group and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oatly Group and JD Sports
The main advantage of trading using opposite Oatly Group and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oatly Group 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.| Oatly Group vs. Flow Beverage Corp | Oatly Group vs. Fbec Worldwide | Oatly Group vs. Hill Street Beverage | Oatly Group vs. Eq Energy Drink |
| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |