Correlation Between CarPartsCom and JD
Can any of the company-specific risk be diversified away by investing in both CarPartsCom and JD 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 CarPartsCom and JD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarPartsCom and JD Inc Adr, you can compare the effects of market volatilities on CarPartsCom and JD 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 CarPartsCom with a short position of JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarPartsCom and JD.
Diversification Opportunities for CarPartsCom and JD
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between CarPartsCom and JD is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding CarPartsCom and JD Inc Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc Adr and CarPartsCom 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 CarPartsCom are associated (or correlated) with JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc Adr has no effect on the direction of CarPartsCom i.e., CarPartsCom and JD go up and down completely randomly.
Pair Corralation between CarPartsCom and JD
Given the investment horizon of 90 days CarPartsCom is expected to under-perform the JD. In addition to that, CarPartsCom is 1.2 times more volatile than JD Inc Adr. It trades about -0.08 of its total potential returns per unit of risk. JD Inc Adr is currently generating about -0.01 per unit of volatility. If you would invest 5,506 in JD Inc Adr on September 2, 2024 and sell it today you would lose (1,768) from holding JD Inc Adr or give up 32.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarPartsCom vs. JD Inc Adr
Performance |
| Timeline |
| CarPartsCom |
| JD Inc Adr |
CarPartsCom and JD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarPartsCom and JD
The main advantage of trading using opposite CarPartsCom and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarPartsCom position performs unexpectedly, JD 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 will offset losses from the drop in JD's long position.| CarPartsCom vs. Advance Auto Parts | CarPartsCom vs. Tractor Supply | CarPartsCom vs. Genuine Parts Co | CarPartsCom vs. Five Below |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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