Correlation Between Dicks Sporting and JD
Can any of the company-specific risk be diversified away by investing in both Dicks Sporting and JD 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 Dicks Sporting and JD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dicks Sporting Goods and JD Inc Adr, you can compare the effects of market volatilities on Dicks Sporting and JD 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 Dicks Sporting with a short position of JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicks Sporting and JD.
Diversification Opportunities for Dicks Sporting and JD
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dicks and JD is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and JD Inc Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc Adr and Dicks Sporting 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 Dicks Sporting Goods are associated (or correlated) with JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc Adr has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and JD go up and down completely randomly.
Pair Corralation between Dicks Sporting and JD
Considering the 90-day investment horizon Dicks Sporting Goods is expected to under-perform the JD. But the stock apears to be less risky and, when comparing its historical volatility, Dicks Sporting Goods is 1.55 times less risky than JD. The stock trades about -0.37 of its potential returns per unit of risk. The JD Inc Adr is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 2,738 in JD Inc Adr on January 20, 2024 and sell it today you would lose (192.00) from holding JD Inc Adr or give up 7.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dicks Sporting Goods vs. JD Inc Adr
Performance |
| Timeline |
| Dicks Sporting Goods |
| JD Inc Adr |
Dicks Sporting and JD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dicks Sporting and JD
The main advantage of trading using opposite Dicks Sporting and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dicks Sporting position performs unexpectedly, JD 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 will offset losses from the drop in JD's long position.| Dicks Sporting vs. OReilly Automotive | Dicks Sporting vs. AutoZone | Dicks Sporting vs. Genuine Parts Co | Dicks Sporting vs. Williams Sonoma |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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