Correlation Between USWE SPORTS and International Consolidated

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

Diversification Opportunities for USWE SPORTS and International Consolidated

0.68

Correlation Coefficient

USWE SPORTS  International Consolidated

Poor diversification

The 3 months correlation between USWE and International is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and International Consolidated go up and down completely randomly.

Pair Corralation between USWE SPORTS and International Consolidated

Assuming the 90 days horizon USWE SPORTS AB is expected to under-perform the International Consolidated. In addition to that, USWE SPORTS is 1.59 times more volatile than International Consolidated Airlines. It trades about -0.06 of its total potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.16 per unit of volatility. If you would invest  167.00  in International Consolidated Airlines on October 8, 2024 and sell it today you would earn a total of  196.00  from holding International Consolidated Airlines or generate 117.37% 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.  International Consolidated Air

USWE SPORTS AB

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USWE SPORTS AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, USWE SPORTS reported solid returns over the last few months and may actually be approaching a breakup point.

International Consolidated

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, International Consolidated reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with USWE SPORTS and International Consolidated

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

The idea behind USWE SPORTS AB and International Consolidated Airlines 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.