Correlation Between USWE SPORTS and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both USWE SPORTS and Aristocrat Leisure 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 Aristocrat Leisure 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 Aristocrat Leisure Limited, you can compare the effects of market volatilities on USWE SPORTS and Aristocrat Leisure 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 Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and Aristocrat Leisure.
Diversification Opportunities for USWE SPORTS and Aristocrat Leisure
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between USWE and Aristocrat is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and Aristocrat Leisure Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure 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 Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between USWE SPORTS and Aristocrat Leisure
Assuming the 90 days horizon USWE SPORTS is expected to generate 40.12 times less return on investment than Aristocrat Leisure. In addition to that, USWE SPORTS is 2.16 times more volatile than Aristocrat Leisure Limited. It trades about 0.0 of its total potential returns per unit of risk. Aristocrat Leisure Limited is currently generating about 0.15 per unit of volatility. If you would invest 3,207 in Aristocrat Leisure Limited on October 25, 2024 and sell it today you would earn a total of 1,013 from holding Aristocrat Leisure Limited or generate 31.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
USWE SPORTS AB vs. Aristocrat Leisure Limited
Performance |
| Timeline |
| USWE SPORTS AB |
| Aristocrat Leisure |
USWE SPORTS and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USWE SPORTS and Aristocrat Leisure
The main advantage of trading using opposite USWE SPORTS and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE SPORTS position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| USWE SPORTS vs. Costco Wholesale Corp | USWE SPORTS vs. COSTCO WHOLESALE CDR | USWE SPORTS vs. SPARTAN STORES | USWE SPORTS vs. National Retail Properties |
| Aristocrat Leisure vs. Wizz Air Holdings | Aristocrat Leisure vs. Columbia Sportswear | Aristocrat Leisure vs. FAIR ISAAC | Aristocrat Leisure vs. PLAYTECH |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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