Correlation Between Vestis and JD Sports
Can any of the company-specific risk be diversified away by investing in both Vestis 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 Vestis and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vestis and JD Sports Fashion, you can compare the effects of market volatilities on Vestis 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 Vestis with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestis and JD Sports.
Diversification Opportunities for Vestis and JD Sports
Significant diversification
The 3 months correlation between Vestis and JDSPY is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Vestis 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 Vestis 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 Vestis 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 Vestis i.e., Vestis and JD Sports go up and down completely randomly.
Pair Corralation between Vestis and JD Sports
Given the investment horizon of 90 days Vestis is expected to generate 0.94 times more return on investment than JD Sports. However, Vestis is 1.06 times less risky than JD Sports. It trades about 0.01 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.02 per unit of risk. If you would invest 1,881 in Vestis on September 2, 2024 and sell it today you would lose (273.00) from holding Vestis or give up 14.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestis vs. JD Sports Fashion
Performance |
| Timeline |
| Vestis |
| JD Sports Fashion |
Vestis and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestis and JD Sports
The main advantage of trading using opposite Vestis and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestis 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.| Vestis vs. McGrath RentCorp | Vestis vs. Herc Holdings | Vestis vs. PROG Holdings | Vestis vs. Custom Truck One |
| JD Sports vs. Ulta Beauty | JD Sports vs. Williams Sonoma | JD Sports vs. Dicks Sporting Goods | JD Sports vs. Best Buy Co |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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