Correlation Between Software Circle and JD Sports
Can any of the company-specific risk be diversified away by investing in both Software Circle 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 Software Circle and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Software Circle plc and JD Sports Fashion, you can compare the effects of market volatilities on Software Circle 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 Software Circle with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Software Circle and JD Sports.
Diversification Opportunities for Software Circle and JD Sports
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Software and JD Sports is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Software Circle plc 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 Software Circle 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 Software Circle plc 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 Software Circle i.e., Software Circle and JD Sports go up and down completely randomly.
Pair Corralation between Software Circle and JD Sports
Assuming the 90 days trading horizon Software Circle plc is expected to generate 0.56 times more return on investment than JD Sports. However, Software Circle plc is 1.78 times less risky than JD Sports. It trades about 0.19 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.1 per unit of risk. If you would invest 1,700 in Software Circle plc on October 25, 2024 and sell it today you would earn a total of 800.00 from holding Software Circle plc or generate 47.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Software Circle plc vs. JD Sports Fashion
Performance |
| Timeline |
| Software Circle plc |
| JD Sports Fashion |
Software Circle and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Software Circle and JD Sports
The main advantage of trading using opposite Software Circle and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Software Circle 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.| Software Circle vs. DXC Technology Co | Software Circle vs. Primary Health Properties | Software Circle vs. Cardinal Health | Software Circle vs. Bellevue Healthcare Trust |
| JD Sports vs. Jacquet Metal Service | JD Sports vs. Eastinco Mining Exploration | JD Sports vs. Beowulf Mining | JD Sports vs. Trainline Plc |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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