Correlation Between Sportsmans Warehouse and SPORT LISBOA

Can any of the company-specific risk be diversified away by investing in both Sportsmans Warehouse and SPORT LISBOA 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 Sportsmans Warehouse and SPORT LISBOA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sportsmans Warehouse Holdings and SPORT LISBOA E, you can compare the effects of market volatilities on Sportsmans Warehouse and SPORT LISBOA 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 Sportsmans Warehouse with a short position of SPORT LISBOA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sportsmans Warehouse and SPORT LISBOA.

Diversification Opportunities for Sportsmans Warehouse and SPORT LISBOA

0.07

Correlation Coefficient

Sportsmans Warehouse  SPORT LISBOA

Significant diversification

The 3 months correlation between Sportsmans and SPORT is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sportsmans Warehouse Holdings and SPORT LISBOA E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORT LISBOA E and Sportsmans Warehouse 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 Sportsmans Warehouse Holdings are associated (or correlated) with SPORT LISBOA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORT LISBOA E has no effect on the direction of Sportsmans Warehouse i.e., Sportsmans Warehouse and SPORT LISBOA go up and down completely randomly.

Pair Corralation between Sportsmans Warehouse and SPORT LISBOA

Assuming the 90 days horizon Sportsmans Warehouse Holdings is expected to generate 2.62 times more return on investment than SPORT LISBOA. However, Sportsmans Warehouse is 2.62 times more volatile than SPORT LISBOA E. It trades about 0.0 of its potential returns per unit of risk. SPORT LISBOA E is currently generating about 0.0 per unit of risk. If you would invest  260.00  in Sportsmans Warehouse Holdings on September 14, 2024 and sell it today you would lose (18.00) from holding Sportsmans Warehouse Holdings or give up 6.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sportsmans Warehouse Holdings  vs.  SPORT LISBOA E

Sportsmans Warehouse

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sportsmans Warehouse Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sportsmans Warehouse is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SPORT LISBOA E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPORT LISBOA E has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SPORT LISBOA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sportsmans Warehouse and SPORT LISBOA

The main advantage of trading using opposite Sportsmans Warehouse and SPORT LISBOA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sportsmans Warehouse position performs unexpectedly, SPORT LISBOA 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 SPORT LISBOA will offset losses from the drop in SPORT LISBOA's long position.

The idea behind Sportsmans Warehouse Holdings and SPORT LISBOA E pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.