Correlation Between JD Sports and Playtech Plc

Can any of the company-specific risk be diversified away by investing in both JD Sports and Playtech Plc 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 Playtech Plc 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 Playtech plc, you can compare the effects of market volatilities on JD Sports and Playtech Plc 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 Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Playtech Plc.

Diversification Opportunities for JD Sports and Playtech Plc

0.45

Correlation Coefficient

JD Sports  Playtech Plc

Very weak diversification

The 3 months correlation between JDDSF and Playtech is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc 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 Playtech Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech plc has no effect on the direction of JD Sports i.e., JD Sports and Playtech Plc go up and down completely randomly.

Pair Corralation between JD Sports and Playtech Plc

Assuming the 90 days horizon JD Sports Fashion is expected to generate 1.39 times more return on investment than Playtech Plc. However, JD Sports is 1.39 times more volatile than Playtech plc. It trades about 0.09 of its potential returns per unit of risk. Playtech plc is currently generating about 0.07 per unit of risk. If you would invest  101.00  in JD Sports Fashion on May 18, 2025 and sell it today you would earn a total of  19.00  from holding JD Sports Fashion or generate 18.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

JD Sports Fashion  vs.  Playtech plc

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 conflicting basic indicators, JD Sports reported solid returns over the last few months and may actually be approaching a breakup point.

Playtech plc

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Playtech plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Playtech Plc may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with JD Sports and Playtech Plc

The main advantage of trading using opposite JD Sports and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Playtech Plc 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 Playtech Plc will offset losses from the drop in Playtech Plc's long position.

The idea behind JD Sports Fashion and Playtech plc 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.