Correlation Between Young Cos and JD Sports
Can any of the company-specific risk be diversified away by investing in both Young Cos 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 Young Cos and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Young Cos Brewery and JD Sports Fashion, you can compare the effects of market volatilities on Young Cos 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 Young Cos with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Young Cos and JD Sports.
Diversification Opportunities for Young Cos and JD Sports
Significant diversification
The 3 months correlation between Young and JD Sports is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Young Cos Brewery 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 Young Cos 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 Young Cos Brewery 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 Young Cos i.e., Young Cos and JD Sports go up and down completely randomly.
Pair Corralation between Young Cos and JD Sports
Assuming the 90 days trading horizon Young Cos Brewery is expected to generate 0.36 times more return on investment than JD Sports. However, Young Cos Brewery is 2.76 times less risky than JD Sports. It trades about 0.13 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.27 per unit of risk. If you would invest 60,490 in Young Cos Brewery on August 28, 2024 and sell it today you would earn a total of 2,510 from holding Young Cos Brewery or generate 4.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Young Cos Brewery vs. JD Sports Fashion
Performance |
| Timeline |
| Young Cos Brewery |
| JD Sports Fashion |
Young Cos and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Young Cos and JD Sports
The main advantage of trading using opposite Young Cos and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Young Cos 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.| Young Cos vs. Samsung Electronics Co | Young Cos vs. Samsung Electronics Co | Young Cos vs. Toyota Motor Corp | Young Cos vs. Hon Hai Precision |
| JD Sports vs. Lloyds Banking Group | JD Sports vs. Premier African Minerals | JD Sports vs. SANTANDER UK 8 | JD Sports vs. 88 Energy |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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