Correlation Between USWE SPORTS and LIFENET INSURANCE
Can any of the company-specific risk be diversified away by investing in both USWE SPORTS and LIFENET INSURANCE 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 LIFENET INSURANCE 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 LIFENET INSURANCE CO, you can compare the effects of market volatilities on USWE SPORTS and LIFENET INSURANCE 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 LIFENET INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and LIFENET INSURANCE.
Diversification Opportunities for USWE SPORTS and LIFENET INSURANCE
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USWE and LIFENET is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE 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 LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and LIFENET INSURANCE go up and down completely randomly.
Pair Corralation between USWE SPORTS and LIFENET INSURANCE
Assuming the 90 days horizon USWE SPORTS AB is expected to generate 2.86 times more return on investment than LIFENET INSURANCE. However, USWE SPORTS is 2.86 times more volatile than LIFENET INSURANCE CO. It trades about 0.29 of its potential returns per unit of risk. LIFENET INSURANCE CO is currently generating about 0.18 per unit of risk. If you would invest 60.00 in USWE SPORTS AB on August 28, 2024 and sell it today you would earn a total of 18.00 from holding USWE SPORTS AB or generate 30.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
USWE SPORTS AB vs. LIFENET INSURANCE CO
Performance |
| Timeline |
| USWE SPORTS AB |
| LIFENET INSURANCE |
USWE SPORTS and LIFENET INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USWE SPORTS and LIFENET INSURANCE
The main advantage of trading using opposite USWE SPORTS and LIFENET INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE SPORTS position performs unexpectedly, LIFENET INSURANCE 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 LIFENET INSURANCE will offset losses from the drop in LIFENET INSURANCE's long position.The idea behind USWE SPORTS AB and LIFENET INSURANCE CO 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.| LIFENET INSURANCE vs. Lyxor 1 | LIFENET INSURANCE vs. Xtrackers ShortDAX | LIFENET INSURANCE vs. Xtrackers LevDAX |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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