Correlation Between USWE SPORTS and CARSALES
Can any of the company-specific risk be diversified away by investing in both USWE SPORTS and CARSALES 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 CARSALES 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 CARSALESCOM, you can compare the effects of market volatilities on USWE SPORTS and CARSALES 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 CARSALES. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and CARSALES.
Diversification Opportunities for USWE SPORTS and CARSALES
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between USWE and CARSALES is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and CARSALES go up and down completely randomly.
Pair Corralation between USWE SPORTS and CARSALES
Assuming the 90 days horizon USWE SPORTS AB is expected to generate 2.35 times more return on investment than CARSALES. However, USWE SPORTS is 2.35 times more volatile than CARSALESCOM. It trades about 0.16 of its potential returns per unit of risk. CARSALESCOM is currently generating about 0.18 per unit of risk. If you would invest 57.00 in USWE SPORTS AB on September 4, 2024 and sell it today you would earn a total of 19.00 from holding USWE SPORTS AB or generate 33.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.46% |
Values | Daily Returns |
USWE SPORTS AB vs. CARSALESCOM
Performance |
Timeline |
USWE SPORTS AB |
CARSALESCOM |
USWE SPORTS and CARSALES Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with USWE SPORTS and CARSALES
The main advantage of trading using opposite USWE SPORTS and CARSALES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE SPORTS position performs unexpectedly, CARSALES 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 CARSALES will offset losses from the drop in CARSALES's long position.USWE SPORTS vs. SCANSOURCE | USWE SPORTS vs. Uber Technologies | USWE SPORTS vs. GALENA MINING LTD | USWE SPORTS vs. Playtech plc |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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