Correlation Between JD Sports and DXC Technology
Can any of the company-specific risk be diversified away by investing in both JD Sports and DXC Technology 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 DXC Technology 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 DXC Technology Co, you can compare the effects of market volatilities on JD Sports and DXC Technology 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 DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and DXC Technology.
Diversification Opportunities for JD Sports and DXC Technology
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between JDDSF and DXC is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology 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 DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of JD Sports i.e., JD Sports and DXC Technology go up and down completely randomly.
Pair Corralation between JD Sports and DXC Technology
Assuming the 90 days horizon JD Sports Fashion is expected to generate 1.51 times more return on investment than DXC Technology. However, JD Sports is 1.51 times more volatile than DXC Technology Co. It trades about 0.07 of its potential returns per unit of risk. DXC Technology Co is currently generating about -0.01 per unit of risk. If you would invest 105.00 in JD Sports Fashion on April 14, 2025 and sell it today you would earn a total of 15.00 from holding JD Sports Fashion or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.38% |
| Values | Daily Returns |
JD Sports Fashion vs. DXC Technology Co
Performance |
| Timeline |
| JD Sports Fashion |
| DXC Technology |
JD Sports and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and DXC Technology
The main advantage of trading using opposite JD Sports and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, DXC Technology 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 DXC Technology will offset losses from the drop in DXC Technology's long position.The idea behind JD Sports Fashion and DXC Technology Co 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.| DXC Technology vs. Gartner | DXC Technology vs. CDW Corp | DXC Technology vs. Cognizant Technology Solutions | DXC Technology vs. Fidelity National Information |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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