Correlation Between NextTrip and JD Sports

Can any of the company-specific risk be diversified away by investing in both NextTrip 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 NextTrip and JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NextTrip and JD Sports Fashion, you can compare the effects of market volatilities on NextTrip 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 NextTrip with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextTrip and JD Sports.

Diversification Opportunities for NextTrip and JD Sports

-0.65

Correlation Coefficient

NextTrip  JD Sports

Excellent diversification

The 3 months correlation between NextTrip and JDDSF is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding NextTrip 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 NextTrip 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 NextTrip 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 NextTrip i.e., NextTrip and JD Sports go up and down completely randomly.

Pair Corralation between NextTrip and JD Sports

Given the investment horizon of 90 days NextTrip is expected to generate 4.68 times more return on investment than JD Sports. However, NextTrip is 4.68 times more volatile than JD Sports Fashion. It trades about 0.04 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  662.00  in NextTrip on September 14, 2024 and sell it today you would lose (183.00) from holding NextTrip or give up 27.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

NextTrip  vs.  JD Sports Fashion

NextTrip

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NextTrip are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, NextTrip reported solid returns over the last few months and may actually be approaching a breakup point.

JD Sports Fashion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, JD Sports is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NextTrip and JD Sports

The main advantage of trading using opposite NextTrip and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextTrip 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 NextTrip 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.