Correlation Between JD Sports and Sphere Entertainment
Can any of the company-specific risk be diversified away by investing in both JD Sports and Sphere Entertainment 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 Sphere Entertainment 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 Sphere Entertainment Co, you can compare the effects of market volatilities on JD Sports and Sphere Entertainment 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 Sphere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Sphere Entertainment.
Diversification Opportunities for JD Sports and Sphere Entertainment
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JDDSF and Sphere is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment 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 Sphere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere Entertainment has no effect on the direction of JD Sports i.e., JD Sports and Sphere Entertainment go up and down completely randomly.
Pair Corralation between JD Sports and Sphere Entertainment
Assuming the 90 days horizon JD Sports Fashion is expected to generate 2.64 times more return on investment than Sphere Entertainment. However, JD Sports is 2.64 times more volatile than Sphere Entertainment Co. It trades about 0.12 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about 0.1 per unit of risk. If you would invest 106.00 in JD Sports Fashion on April 27, 2025 and sell it today you would earn a total of 14.00 from holding JD Sports Fashion or generate 13.21% 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. Sphere Entertainment Co
Performance |
| Timeline |
| JD Sports Fashion |
| Sphere Entertainment |
JD Sports and Sphere Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Sphere Entertainment
The main advantage of trading using opposite JD Sports and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Sphere Entertainment 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 Sphere Entertainment will offset losses from the drop in Sphere Entertainment's long position.The idea behind JD Sports Fashion and Sphere Entertainment 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.| Sphere Entertainment vs. Globalstar, Common Stock | Sphere Entertainment vs. Boston Properties | Sphere Entertainment vs. Nextplat Corp | Sphere Entertainment vs. Kilroy Realty Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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