Correlation Between Twilio and JD Sports

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

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

Diversification Opportunities for Twilio and JD Sports

0.53

Correlation Coefficient

Twilio  JD Sports

Very weak diversification

The 3 months correlation between Twilio and JDDSF is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Twilio Inc 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 Twilio 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 Twilio Inc 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 Twilio i.e., Twilio and JD Sports go up and down completely randomly.

Pair Corralation between Twilio and JD Sports

Given the investment horizon of 90 days Twilio Inc is expected to generate 0.65 times more return on investment than JD Sports. However, Twilio Inc is 1.53 times less risky than JD Sports. It trades about 0.22 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  9,788  in Twilio Inc on May 1, 2025 and sell it today you would earn a total of  3,304  from holding Twilio Inc or generate 33.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Twilio Inc  vs.  JD Sports Fashion

Twilio Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Twilio Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Twilio displayed solid returns over the last few months and may actually be approaching a breakup point.

JD Sports Fashion

Risk-Adjusted Performance

OK

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.

Pair Trading with Twilio and JD Sports

The main advantage of trading using opposite Twilio and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Twilio 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 Twilio Inc 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.