Correlation Between BBB Foods and JD Sports
Can any of the company-specific risk be diversified away by investing in both BBB Foods 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 BBB Foods and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and JD Sports Fashion, you can compare the effects of market volatilities on BBB Foods 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 BBB Foods with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and JD Sports.
Diversification Opportunities for BBB Foods and JD Sports
Very weak diversification
The 3 months correlation between BBB and JDDSF is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods 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 BBB Foods 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 BBB Foods 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 BBB Foods i.e., BBB Foods and JD Sports go up and down completely randomly.
Pair Corralation between BBB Foods and JD Sports
Given the investment horizon of 90 days BBB Foods is expected to generate 0.84 times more return on investment than JD Sports. However, BBB Foods is 1.19 times less risky than JD Sports. It trades about -0.17 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.22 per unit of risk. If you would invest 3,200 in BBB Foods on September 3, 2024 and sell it today you would lose (378.00) from holding BBB Foods or give up 11.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBB Foods vs. JD Sports Fashion
Performance |
| Timeline |
| BBB Foods |
| JD Sports Fashion |
BBB Foods and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and JD Sports
The main advantage of trading using opposite BBB Foods and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods 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.| BBB Foods vs. NetSol Technologies | BBB Foods vs. Analog Devices | BBB Foods vs. FARO Technologies | BBB Foods vs. Getty Images Holdings |
| JD Sports vs. Guess Inc | JD Sports vs. Foot Locker | JD Sports vs. JPMorgan Chase Co | JD Sports vs. Home Depot |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |