Correlation Between Zedge and JD Sports
Can any of the company-specific risk be diversified away by investing in both Zedge 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 Zedge and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zedge Inc and JD Sports Fashion, you can compare the effects of market volatilities on Zedge 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 Zedge with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zedge and JD Sports.
Diversification Opportunities for Zedge and JD Sports
Weak diversification
The 3 months correlation between Zedge and JDDSF is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Zedge Inc 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 Zedge 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 Zedge Inc 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 Zedge i.e., Zedge and JD Sports go up and down completely randomly.
Pair Corralation between Zedge and JD Sports
Given the investment horizon of 90 days Zedge Inc is expected to generate 3.2 times more return on investment than JD Sports. However, Zedge is 3.2 times more volatile than JD Sports Fashion. It trades about 0.0 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.01 per unit of risk. If you would invest 325.00 in Zedge Inc on October 7, 2024 and sell it today you would lose (62.00) from holding Zedge Inc or give up 19.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zedge Inc vs. JD Sports Fashion
Performance |
| Timeline |
| Zedge Inc |
| JD Sports Fashion |
Zedge and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zedge and JD Sports
The main advantage of trading using opposite Zedge and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zedge 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.The idea behind Zedge Inc and JD Sports Fashion pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| JD Sports vs. Ceconomy AG ADR | JD Sports vs. Tandy Leather Factory | JD Sports vs. School Specialty | JD Sports vs. Bowlin Travel Centers |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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