Correlation Between JD Sports and United Parks
Can any of the company-specific risk be diversified away by investing in both JD Sports and United Parks 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 JD Sports and United Parks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD Sports Fashion and United Parks Resorts, you can compare the effects of market volatilities on JD Sports and United Parks 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 JD Sports with a short position of United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and United Parks.
Diversification Opportunities for JD Sports and United Parks
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JDDSF and United is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts and JD Sports 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 JD Sports Fashion are associated (or correlated) with United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of JD Sports i.e., JD Sports and United Parks go up and down completely randomly.
Pair Corralation between JD Sports and United Parks
Assuming the 90 days horizon JD Sports Fashion is expected to generate 1.24 times more return on investment than United Parks. However, JD Sports is 1.24 times more volatile than United Parks Resorts. It trades about -0.07 of its potential returns per unit of risk. United Parks Resorts is currently generating about -0.22 per unit of risk. If you would invest 148.00 in JD Sports Fashion on February 2, 2024 and sell it today you would lose (7.00) from holding JD Sports Fashion or give up 4.73% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.65% |
Values | Daily Returns |
JD Sports Fashion vs. United Parks Resorts
Performance |
Timeline |
JD Sports Fashion |
United Parks Resorts |
JD Sports and United Parks Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JD Sports and United Parks
The main advantage of trading using opposite JD Sports and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.JD Sports vs. OReilly Automotive | JD Sports vs. AutoZone | JD Sports vs. Tractor Supply | JD Sports vs. Genuine Parts Co |
United Parks vs. Amer Sports | United Parks vs. Vista Outdoor | United Parks vs. Escalade Incorporated | United Parks vs. Funko Inc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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