Correlation Between LIFENET INSURANCE and USWE SPORTS
Can any of the company-specific risk be diversified away by investing in both LIFENET INSURANCE and USWE SPORTS 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 LIFENET INSURANCE and USWE SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFENET INSURANCE CO and USWE SPORTS AB, you can compare the effects of market volatilities on LIFENET INSURANCE and USWE SPORTS 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 LIFENET INSURANCE with a short position of USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFENET INSURANCE and USWE SPORTS.
Diversification Opportunities for LIFENET INSURANCE and USWE SPORTS
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LIFENET and USWE is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE CO and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB and LIFENET INSURANCE 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 LIFENET INSURANCE CO are associated (or correlated) with USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of LIFENET INSURANCE i.e., LIFENET INSURANCE and USWE SPORTS go up and down completely randomly.
Pair Corralation between LIFENET INSURANCE and USWE SPORTS
Assuming the 90 days horizon LIFENET INSURANCE is expected to generate 12.76 times less return on investment than USWE SPORTS. But when comparing it to its historical volatility, LIFENET INSURANCE CO is 2.22 times less risky than USWE SPORTS. It trades about 0.05 of its potential returns per unit of risk. USWE SPORTS AB is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 59.00 in USWE SPORTS AB on August 31, 2024 and sell it today you would earn a total of 17.00 from holding USWE SPORTS AB or generate 28.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFENET INSURANCE CO vs. USWE SPORTS AB
Performance |
| Timeline |
| LIFENET INSURANCE |
| USWE SPORTS AB |
LIFENET INSURANCE and USWE SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFENET INSURANCE and USWE SPORTS
The main advantage of trading using opposite LIFENET INSURANCE and USWE SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFENET INSURANCE position performs unexpectedly, USWE SPORTS 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 USWE SPORTS will offset losses from the drop in USWE SPORTS's long position.| LIFENET INSURANCE vs. ONWARD MEDICAL BV | LIFENET INSURANCE vs. CHINA TONTINE WINES | LIFENET INSURANCE vs. ITALIAN WINE BRANDS | LIFENET INSURANCE vs. MELIA HOTELS |
| USWE SPORTS vs. Li Ning Company | USWE SPORTS vs. Trip Group Limited | USWE SPORTS vs. Superior Plus Corp | USWE SPORTS vs. NMI Holdings |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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