Correlation Between USWE SPORTS and American Electric
Can any of the company-specific risk be diversified away by investing in both USWE SPORTS and American Electric 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 American Electric 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 American Electric Power, you can compare the effects of market volatilities on USWE SPORTS and American Electric 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 American Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and American Electric.
Diversification Opportunities for USWE SPORTS and American Electric
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between USWE and American is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and American Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Electric Power 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 American Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Electric Power has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and American Electric go up and down completely randomly.
Pair Corralation between USWE SPORTS and American Electric
Assuming the 90 days horizon USWE SPORTS AB is expected to generate 1.12 times more return on investment than American Electric. However, USWE SPORTS is 1.12 times more volatile than American Electric Power. It trades about 0.12 of its potential returns per unit of risk. American Electric Power is currently generating about 0.06 per unit of risk. If you would invest 72.00 in USWE SPORTS AB on November 2, 2024 and sell it today you would earn a total of 11.00 from holding USWE SPORTS AB or generate 15.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
USWE SPORTS AB vs. American Electric Power
Performance |
| Timeline |
| USWE SPORTS AB |
| American Electric Power |
USWE SPORTS and American Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USWE SPORTS and American Electric
The main advantage of trading using opposite USWE SPORTS and American Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE SPORTS position performs unexpectedly, American Electric 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 American Electric will offset losses from the drop in American Electric's long position.| USWE SPORTS vs. BROADSTNET LEADL 00025 | USWE SPORTS vs. Singapore Reinsurance | USWE SPORTS vs. BII Railway Transportation | USWE SPORTS vs. Nishi Nippon Railroad Co |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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