Correlation Between Sterling Construction and USWE SPORTS
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and USWE SPORTS 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 Sterling Construction and USWE SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and USWE SPORTS AB, you can compare the effects of market volatilities on Sterling Construction and USWE SPORTS 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 Sterling Construction with a short position of USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and USWE SPORTS.
Diversification Opportunities for Sterling Construction and USWE SPORTS
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sterling and USWE is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB and Sterling Construction 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 Sterling Construction are associated (or correlated) with USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of Sterling Construction i.e., Sterling Construction and USWE SPORTS go up and down completely randomly.
Pair Corralation between Sterling Construction and USWE SPORTS
Assuming the 90 days horizon Sterling Construction is expected to generate 1.67 times less return on investment than USWE SPORTS. In addition to that, Sterling Construction is 1.62 times more volatile than USWE SPORTS AB. It trades about 0.11 of its total potential returns per unit of risk. USWE SPORTS AB is currently generating about 0.31 per unit of volatility. If you would invest 74.00 in USWE SPORTS AB on October 30, 2024 and sell it today you would earn a total of 11.00 from holding USWE SPORTS AB or generate 14.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. USWE SPORTS AB
Performance |
| Timeline |
| Sterling Construction |
| USWE SPORTS AB |
Sterling Construction and USWE SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and USWE SPORTS
The main advantage of trading using opposite Sterling Construction and USWE SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, USWE SPORTS 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 USWE SPORTS will offset losses from the drop in USWE SPORTS's long position.| Sterling Construction vs. Japan Medical Dynamic | Sterling Construction vs. CEOTRONICS | Sterling Construction vs. LANDSEA GREEN MANAGEMENT | Sterling Construction vs. Marie Brizard Wine |
| USWE SPORTS vs. GAMESTOP | USWE SPORTS vs. Media and Games | USWE SPORTS vs. Boyd Gaming | USWE SPORTS vs. PARKEN Sport Entertainment |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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