Correlation Between JD Sports and Catalyst Media

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

Diversification Opportunities for JD Sports and Catalyst Media

0.04

Correlation Coefficient

JD Sports  Catalyst Media

Significant diversification

The 3 months correlation between JD Sports and Catalyst is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Catalyst Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Media Group 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 Catalyst Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Media Group has no effect on the direction of JD Sports i.e., JD Sports and Catalyst Media go up and down completely randomly.

Pair Corralation between JD Sports and Catalyst Media

Assuming the 90 days trading horizon JD Sports is expected to generate 1.64 times less return on investment than Catalyst Media. But when comparing it to its historical volatility, JD Sports Fashion is 1.11 times less risky than Catalyst Media. It trades about 0.08 of its potential returns per unit of risk. Catalyst Media Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4,750  in Catalyst Media Group on April 23, 2025 and sell it today you would earn a total of  1,000.00  from holding Catalyst Media Group or generate 21.05% return on investment over 90 days.

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

JD Sports Fashion  vs.  Catalyst Media Group

JD Sports Fashion

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JD Sports Fashion are ranked lower than 6 (%) 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.

Catalyst Media Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Media Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Catalyst Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD Sports and Catalyst Media

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

The idea behind JD Sports Fashion and Catalyst Media Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.