Correlation Between JD Sports and SmartSet Automation

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

Diversification Opportunities for JD Sports and SmartSet Automation

0.01

Correlation Coefficient

JD Sports  SmartSet Automation

Significant diversification

The 3 months correlation between JDSPY and SmartSet is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and SmartSet Automation LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartSet Automation LLC 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 SmartSet Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartSet Automation LLC has no effect on the direction of JD Sports i.e., JD Sports and SmartSet Automation go up and down completely randomly.

Pair Corralation between JD Sports and SmartSet Automation

Assuming the 90 days horizon JD Sports is expected to generate 3.24 times less return on investment than SmartSet Automation. But when comparing it to its historical volatility, JD Sports Fashion is 4.19 times less risky than SmartSet Automation. It trades about 0.03 of its potential returns per unit of risk. SmartSet Automation LLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.25  in SmartSet Automation LLC on May 8, 2025 and sell it today you would lose (0.10) from holding SmartSet Automation LLC or give up 40.0% of portfolio value over 90 days.

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

JD Sports Fashion  vs.  SmartSet Automation LLC

JD Sports Fashion

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JD Sports Fashion are ranked lower than 2 (%) 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.

SmartSet Automation LLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SmartSet Automation LLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, SmartSet Automation exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD Sports and SmartSet Automation

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

The idea behind JD Sports Fashion and SmartSet Automation LLC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..