Correlation Between WideOpenWest and Tele2 AB

Can any of the company-specific risk be diversified away by investing in both WideOpenWest and Tele2 AB 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 WideOpenWest and Tele2 AB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WideOpenWest and Tele2 AB, you can compare the effects of market volatilities on WideOpenWest and Tele2 AB 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 WideOpenWest with a short position of Tele2 AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of WideOpenWest and Tele2 AB.

Diversification Opportunities for WideOpenWest and Tele2 AB

-0.02

Correlation Coefficient

WideOpenWest  Tele2 AB

Good diversification

The 3 months correlation between WideOpenWest and Tele2 is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding WideOpenWest and Tele2 AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tele2 AB and WideOpenWest 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 WideOpenWest are associated (or correlated) with Tele2 AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tele2 AB has no effect on the direction of WideOpenWest i.e., WideOpenWest and Tele2 AB go up and down completely randomly.

Pair Corralation between WideOpenWest and Tele2 AB

Considering the 90-day investment horizon WideOpenWest is expected to generate 1.71 times more return on investment than Tele2 AB. However, WideOpenWest is 1.71 times more volatile than Tele2 AB. It trades about 0.05 of its potential returns per unit of risk. Tele2 AB is currently generating about 0.06 per unit of risk. If you would invest  373.00  in WideOpenWest on September 12, 2024 and sell it today you would earn a total of  137.00  from holding WideOpenWest or generate 36.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.79%
Values	Daily Returns

WideOpenWest  vs.  Tele2 AB

WideOpenWest

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days WideOpenWest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, WideOpenWest is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tele2 AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tele2 AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Tele2 AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WideOpenWest and Tele2 AB

The main advantage of trading using opposite WideOpenWest and Tele2 AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WideOpenWest position performs unexpectedly, Tele2 AB 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 Tele2 AB will offset losses from the drop in Tele2 AB's long position.

The idea behind WideOpenWest and Tele2 AB 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.