Correlation Between Universal Entertainment and Sportsmans Warehouse
Can any of the company-specific risk be diversified away by investing in both Universal Entertainment and Sportsmans Warehouse 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 Universal Entertainment and Sportsmans Warehouse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Entertainment and Sportsmans Warehouse Holdings, you can compare the effects of market volatilities on Universal Entertainment and Sportsmans Warehouse 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 Universal Entertainment with a short position of Sportsmans Warehouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Entertainment and Sportsmans Warehouse.
Diversification Opportunities for Universal Entertainment and Sportsmans Warehouse
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and Sportsmans is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Universal Entertainment and Sportsmans Warehouse Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsmans Warehouse and Universal Entertainment 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 Universal Entertainment are associated (or correlated) with Sportsmans Warehouse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsmans Warehouse has no effect on the direction of Universal Entertainment i.e., Universal Entertainment and Sportsmans Warehouse go up and down completely randomly.
Pair Corralation between Universal Entertainment and Sportsmans Warehouse
Assuming the 90 days trading horizon Universal Entertainment is expected to generate 0.53 times more return on investment than Sportsmans Warehouse. However, Universal Entertainment is 1.88 times less risky than Sportsmans Warehouse. It trades about -0.07 of its potential returns per unit of risk. Sportsmans Warehouse Holdings is currently generating about -0.04 per unit of risk. If you would invest 1,120 in Universal Entertainment on December 4, 2024 and sell it today you would lose (495.00) from holding Universal Entertainment or give up 44.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Entertainment vs. Sportsmans Warehouse Holdings
Performance |
| Timeline |
| Universal Entertainment |
| Sportsmans Warehouse |
Universal Entertainment and Sportsmans Warehouse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Entertainment and Sportsmans Warehouse
The main advantage of trading using opposite Universal Entertainment and Sportsmans Warehouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Entertainment position performs unexpectedly, Sportsmans Warehouse 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 Sportsmans Warehouse will offset losses from the drop in Sportsmans Warehouse's long position.| Universal Entertainment vs. AUTO TRADER ADR | Universal Entertainment vs. HAVERTY FURNITURE A | Universal Entertainment vs. Focus Home Interactive | Universal Entertainment vs. GOME Retail Holdings |
| Sportsmans Warehouse vs. Waste Management | Sportsmans Warehouse vs. MAANSHAN IRON H | Sportsmans Warehouse vs. Platinum Investment Management | Sportsmans Warehouse vs. ALERION CLEANPOWER |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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