Correlation Between JD SPORTS and Deutsche Wohnen

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

By analyzing existing cross correlation between JD SPORTS FASH and Deutsche Wohnen SE, you can compare the effects of market volatilities on JD SPORTS and Deutsche Wohnen 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 Deutsche Wohnen. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Deutsche Wohnen.

Diversification Opportunities for JD SPORTS and Deutsche Wohnen

0.56

Correlation Coefficient

JD SPORTS  Deutsche Wohnen

Very weak diversification

The 3 months correlation between 9JD and Deutsche is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Deutsche Wohnen SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Wohnen SE 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 FASH are associated (or correlated) with Deutsche Wohnen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Wohnen SE has no effect on the direction of JD SPORTS i.e., JD SPORTS and Deutsche Wohnen go up and down completely randomly.

Pair Corralation between JD SPORTS and Deutsche Wohnen

Assuming the 90 days horizon JD SPORTS FASH is expected to generate 2.42 times more return on investment than Deutsche Wohnen. However, JD SPORTS is 2.42 times more volatile than Deutsche Wohnen SE. It trades about 0.16 of its potential returns per unit of risk. Deutsche Wohnen SE is currently generating about 0.23 per unit of risk. If you would invest  73.00  in JD SPORTS FASH on April 5, 2025 and sell it today you would earn a total of  31.00  from holding JD SPORTS FASH or generate 42.47% return on investment over 90 days.

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

JD SPORTS FASH  vs.  Deutsche Wohnen SE

JD SPORTS FASH

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JD SPORTS FASH are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, JD SPORTS reported solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Wohnen SE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Wohnen SE are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Deutsche Wohnen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD SPORTS and Deutsche Wohnen

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

The idea behind JD SPORTS FASH and Deutsche Wohnen SE 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.