Correlation Between JD Sports and BlackRock Frontiers

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

Diversification Opportunities for JD Sports and BlackRock Frontiers

0.62

Correlation Coefficient

JD Sports  BlackRock Frontiers

Poor diversification

The 3 months correlation between JD Sports and BlackRock is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and BlackRock Frontiers Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Frontiers 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 BlackRock Frontiers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Frontiers has no effect on the direction of JD Sports i.e., JD Sports and BlackRock Frontiers go up and down completely randomly.

Pair Corralation between JD Sports and BlackRock Frontiers

Assuming the 90 days trading horizon JD Sports Fashion is expected to generate 2.88 times more return on investment than BlackRock Frontiers. However, JD Sports is 2.88 times more volatile than BlackRock Frontiers Investment. It trades about 0.1 of its potential returns per unit of risk. BlackRock Frontiers Investment is currently generating about 0.23 per unit of risk. If you would invest  7,754  in JD Sports Fashion on April 25, 2025 and sell it today you would earn a total of  1,224  from holding JD Sports Fashion or generate 15.79% 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.  BlackRock Frontiers Investment

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 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, JD Sports exhibited solid returns over the last few months and may actually be approaching a breakup point.

BlackRock Frontiers

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Frontiers Investment are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BlackRock Frontiers unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD Sports and BlackRock Frontiers

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

The idea behind JD Sports Fashion and BlackRock Frontiers Investment 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.