Correlation Between JD and Marshall Ilsley

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

By analyzing existing cross correlation between JD Inc Adr and Marshall Ilsley Corp, you can compare the effects of market volatilities on JD and Marshall Ilsley 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 with a short position of Marshall Ilsley. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD and Marshall Ilsley.

Diversification Opportunities for JD and Marshall Ilsley

-0.5

Correlation Coefficient

JD  Marshall Ilsley

Very good diversification

The 3 months correlation between JD and Marshall is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc Adr and Marshall Ilsley Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marshall Ilsley Corp and JD 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 Inc Adr are associated (or correlated) with Marshall Ilsley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marshall Ilsley Corp has no effect on the direction of JD i.e., JD and Marshall Ilsley go up and down completely randomly.

Pair Corralation between JD and Marshall Ilsley

Allowing for the 90-day total investment horizon JD Inc Adr is expected to generate 0.46 times more return on investment than Marshall Ilsley. However, JD Inc Adr is 2.16 times less risky than Marshall Ilsley. It trades about 0.0 of its potential returns per unit of risk. Marshall Ilsley Corp is currently generating about -0.04 per unit of risk. If you would invest  4,813  in JD Inc Adr on February 14, 2024 and sell it today you would lose (1,435) from holding JD Inc Adr or give up 29.82% of portfolio value over 90 days.

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

JD Inc Adr  vs.  Marshall Ilsley Corp

JD Inc Adr

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc Adr are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, JD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Marshall Ilsley Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marshall Ilsley Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Marshall Ilsley is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with JD and Marshall Ilsley

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

The idea behind JD Inc Adr and Marshall Ilsley Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.