Correlation Between JD Sports and Veralto

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

Diversification Opportunities for JD Sports and Veralto

0.61

Correlation Coefficient

JD Sports  Veralto

Poor diversification

The 3 months correlation between JDDSF and Veralto is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Veralto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veralto 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 Veralto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veralto has no effect on the direction of JD Sports i.e., JD Sports and Veralto go up and down completely randomly.

Pair Corralation between JD Sports and Veralto

Assuming the 90 days horizon JD Sports Fashion is expected to generate 3.57 times more return on investment than Veralto. However, JD Sports is 3.57 times more volatile than Veralto. It trades about 0.1 of its potential returns per unit of risk. Veralto is currently generating about 0.13 per unit of risk. If you would invest  101.00  in JD Sports Fashion on May 27, 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	Significant
Accuracy	100.0%
Values	Daily Returns

JD Sports Fashion  vs.  Veralto

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

Veralto

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Veralto are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Veralto may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with JD Sports and Veralto

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

The idea behind JD Sports Fashion and Veralto 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.