Correlation Between JD Sports and Digi International

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

Diversification Opportunities for JD Sports and Digi International

0.23

Correlation Coefficient

JD Sports  Digi International

Modest diversification

The 3 months correlation between JDSPY and Digi is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International 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 Digi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digi International has no effect on the direction of JD Sports i.e., JD Sports and Digi International go up and down completely randomly.

Pair Corralation between JD Sports and Digi International

Assuming the 90 days horizon JD Sports Fashion is expected to generate 1.75 times more return on investment than Digi International. However, JD Sports is 1.75 times more volatile than Digi International. It trades about 0.05 of its potential returns per unit of risk. Digi International is currently generating about 0.05 per unit of risk. If you would invest  113.00  in JD Sports Fashion on May 24, 2025 and sell it today you would earn a total of  8.00  from holding JD Sports Fashion or generate 7.08% return on investment over 90 days.

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

JD Sports Fashion  vs.  Digi International

JD Sports Fashion

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in JD Sports Fashion are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, JD Sports may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Digi International

Risk-Adjusted Performance

Weakest

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Digi International may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with JD Sports and Digi International

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

The idea behind JD Sports Fashion and Digi International 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.