Correlation Between USWE SPORTS and WICKES GROUP

Can any of the company-specific risk be diversified away by investing in both USWE SPORTS and WICKES GROUP 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 WICKES GROUP 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 WICKES GROUP PLC, you can compare the effects of market volatilities on USWE SPORTS and WICKES GROUP 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 WICKES GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and WICKES GROUP.

Diversification Opportunities for USWE SPORTS and WICKES GROUP

0.62

Correlation Coefficient

USWE SPORTS  WICKES GROUP

Poor diversification

The 3 months correlation between USWE and WICKES is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and WICKES GROUP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WICKES GROUP PLC 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 WICKES GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WICKES GROUP PLC has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and WICKES GROUP go up and down completely randomly.

Pair Corralation between USWE SPORTS and WICKES GROUP

Assuming the 90 days horizon USWE SPORTS is expected to generate 1.64 times less return on investment than WICKES GROUP. But when comparing it to its historical volatility, USWE SPORTS AB is 1.06 times less risky than WICKES GROUP. It trades about 0.05 of its potential returns per unit of risk. WICKES GROUP PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  180.00  in WICKES GROUP PLC on December 19, 2024 and sell it today you would earn a total of  18.00  from holding WICKES GROUP PLC or generate 10.0% 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.  WICKES GROUP PLC

USWE SPORTS AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in USWE SPORTS AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, USWE SPORTS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

WICKES GROUP PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WICKES GROUP PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, WICKES GROUP may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with USWE SPORTS and WICKES GROUP

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

The idea behind USWE SPORTS AB and WICKES GROUP PLC 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 Global Correlations module to find global opportunities by holding instruments from different markets.