Correlation Between USWE SPORTS and United States
Can any of the company-specific risk be diversified away by investing in both USWE SPORTS and United States 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 United States 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 United States Steel, you can compare the effects of market volatilities on USWE SPORTS and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and United States.
Diversification Opportunities for USWE SPORTS and United States
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USWE and United is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and United States go up and down completely randomly.
Pair Corralation between USWE SPORTS and United States
Assuming the 90 days horizon USWE SPORTS AB is expected to under-perform the United States. In addition to that, USWE SPORTS is 1.44 times more volatile than United States Steel. It trades about -0.01 of its total potential returns per unit of risk. United States Steel is currently generating about 0.04 per unit of volatility. If you would invest 2,664 in United States Steel on September 1, 2024 and sell it today you would earn a total of 1,126 from holding United States Steel or generate 42.27% 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. United States Steel
Performance |
| Timeline |
| USWE SPORTS AB |
| United States Steel |
USWE SPORTS and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USWE SPORTS and United States
The main advantage of trading using opposite USWE SPORTS and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE SPORTS position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| USWE SPORTS vs. Li Ning Company | USWE SPORTS vs. Trip Group Limited | USWE SPORTS vs. Superior Plus Corp | USWE SPORTS vs. NMI Holdings |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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