Correlation Between USWE SPORTS and PENN NATL
Can any of the company-specific risk be diversified away by investing in both USWE SPORTS and PENN NATL 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 PENN NATL 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 PENN NATL GAMING, you can compare the effects of market volatilities on USWE SPORTS and PENN NATL 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 PENN NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and PENN NATL.
Diversification Opportunities for USWE SPORTS and PENN NATL
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between USWE and PENN is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and PENN NATL GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN NATL GAMING 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 PENN NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN NATL GAMING has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and PENN NATL go up and down completely randomly.
Pair Corralation between USWE SPORTS and PENN NATL
Assuming the 90 days horizon USWE SPORTS AB is expected to under-perform the PENN NATL. In addition to that, USWE SPORTS is 1.32 times more volatile than PENN NATL GAMING. It trades about -0.03 of its total potential returns per unit of risk. PENN NATL GAMING is currently generating about -0.02 per unit of volatility. If you would invest 3,255 in PENN NATL GAMING on September 3, 2024 and sell it today you would lose (1,272) from holding PENN NATL GAMING or give up 39.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
USWE SPORTS AB vs. PENN NATL GAMING
Performance |
| Timeline |
| USWE SPORTS AB |
| PENN NATL GAMING |
USWE SPORTS and PENN NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USWE SPORTS and PENN NATL
The main advantage of trading using opposite USWE SPORTS and PENN NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE SPORTS position performs unexpectedly, PENN NATL 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 PENN NATL will offset losses from the drop in PENN NATL's long position.| USWE SPORTS vs. Li Ning Company | USWE SPORTS vs. SHIMANO INC UNSPADR10 | USWE SPORTS vs. Superior Plus Corp | USWE SPORTS vs. NMI Holdings |
| PENN NATL vs. NTG Nordic Transport | PENN NATL vs. ARISTOCRAT LEISURE | PENN NATL vs. PARKEN Sport Entertainment | PENN NATL vs. USWE SPORTS AB |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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