Correlation Between USWE SPORTS and LEGAL GENERAL

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

Diversification Opportunities for USWE SPORTS and LEGAL GENERAL

0.56

Correlation Coefficient

USWE SPORTS  LEGAL GENERAL

Very weak diversification

The 3 months correlation between USWE and LEGAL is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and LEGAL GENERAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEGAL GENERAL 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 LEGAL GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEGAL GENERAL has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and LEGAL GENERAL go up and down completely randomly.

Pair Corralation between USWE SPORTS and LEGAL GENERAL

Assuming the 90 days horizon USWE SPORTS is expected to generate 1.33 times less return on investment than LEGAL GENERAL. In addition to that, USWE SPORTS is 1.46 times more volatile than LEGAL GENERAL. It trades about 0.05 of its total potential returns per unit of risk. LEGAL GENERAL is currently generating about 0.09 per unit of volatility. If you would invest  270.00  in LEGAL GENERAL on December 19, 2024 and sell it today you would earn a total of  24.00  from holding LEGAL GENERAL or generate 8.89% return on investment over 90 days.

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

USWE SPORTS AB  vs.  LEGAL GENERAL

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.

LEGAL GENERAL

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LEGAL GENERAL are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, LEGAL GENERAL may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with USWE SPORTS and LEGAL GENERAL

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

The idea behind USWE SPORTS AB and LEGAL GENERAL 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.