Correlation Between Ross Stores and JD SPORTS
Can any of the company-specific risk be diversified away by investing in both Ross Stores 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 Ross Stores and JD SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and JD SPORTS FASH, you can compare the effects of market volatilities on Ross Stores 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 Ross Stores with a short position of JD SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and JD SPORTS.
Diversification Opportunities for Ross Stores and JD SPORTS
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ross and 9JD is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores 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 Ross Stores 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 Ross Stores 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 Ross Stores i.e., Ross Stores and JD SPORTS go up and down completely randomly.
Pair Corralation between Ross Stores and JD SPORTS
Assuming the 90 days horizon Ross Stores is expected to generate 0.67 times more return on investment than JD SPORTS. However, Ross Stores is 1.49 times less risky than JD SPORTS. It trades about 0.23 of its potential returns per unit of risk. JD SPORTS FASH is currently generating about -0.16 per unit of risk. If you would invest 12,802 in Ross Stores on September 3, 2024 and sell it today you would earn a total of 1,840 from holding Ross Stores or generate 14.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. JD SPORTS FASH
Performance |
| Timeline |
| Ross Stores |
| JD SPORTS FASH |
Ross Stores and JD SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and JD SPORTS
The main advantage of trading using opposite Ross Stores and JD SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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.| Ross Stores vs. BORR DRILLING NEW | Ross Stores vs. Direct Line Insurance | Ross Stores vs. Safety Insurance Group | Ross Stores vs. Japan Post Insurance |
| JD SPORTS vs. FAST RETAILCOSPHDR 1 | JD SPORTS vs. FAST RETAIL ADR | JD SPORTS vs. Ross Stores | JD SPORTS vs. Designer Brands |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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