Correlation Between ECGI Holdings and JD Sports

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

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

Diversification Opportunities for ECGI Holdings and JD Sports

-0.41

Correlation Coefficient

ECGI Holdings  JD Sports

Very good diversification

The 3 months correlation between ECGI and JDDSF is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding ECGI Holdings 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 ECGI Holdings 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 ECGI Holdings 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 ECGI Holdings i.e., ECGI Holdings and JD Sports go up and down completely randomly.

Pair Corralation between ECGI Holdings and JD Sports

Given the investment horizon of 90 days ECGI Holdings is expected to generate 3.89 times more return on investment than JD Sports. However, ECGI Holdings is 3.89 times more volatile than JD Sports Fashion. It trades about 0.05 of its potential returns per unit of risk. JD Sports Fashion is currently generating about 0.1 per unit of risk. If you would invest  0.08  in ECGI Holdings on May 22, 2025 and sell it today you would lose (0.01) from holding ECGI Holdings or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

ECGI Holdings  vs.  JD Sports Fashion

ECGI Holdings

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in ECGI Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, ECGI Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

JD Sports Fashion

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in JD Sports Fashion are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, JD Sports reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ECGI Holdings and JD Sports

The main advantage of trading using opposite ECGI Holdings and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECGI Holdings 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 ECGI Holdings 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.