Correlation Between USWE SPORTS and Primo Water

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

By analyzing existing cross correlation between USWE SPORTS AB and Primo Water Corp, you can compare the effects of market volatilities on USWE SPORTS and Primo Water 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 USWE SPORTS with a short position of Primo Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and Primo Water.

Diversification Opportunities for USWE SPORTS and Primo Water

0.84

Correlation Coefficient

USWE SPORTS  Primo Water

Very poor diversification

The 3 months correlation between USWE and Primo is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and Primo Water Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primo Water Corp and USWE 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 USWE SPORTS AB are associated (or correlated) with Primo Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primo Water Corp has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and Primo Water go up and down completely randomly.

Pair Corralation between USWE SPORTS and Primo Water

Assuming the 90 days horizon USWE SPORTS AB is expected to under-perform the Primo Water. In addition to that, USWE SPORTS is 2.24 times more volatile than Primo Water Corp. It trades about -0.03 of its total potential returns per unit of risk. Primo Water Corp is currently generating about 0.06 per unit of volatility. If you would invest  1,364  in Primo Water Corp on September 4, 2024 and sell it today you would earn a total of  856.00  from holding Primo Water Corp or generate 62.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.83%
Values	Daily Returns

USWE SPORTS AB  vs.  Primo Water Corp

USWE SPORTS AB

Risk-Adjusted Performance

12 of 100

Good

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

Primo Water Corp

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Primo Water Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Primo Water reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with USWE SPORTS and Primo Water

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

The idea behind USWE SPORTS AB and Primo Water 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.