Correlation Between USWE SPORTS and NVIDIA

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

Diversification Opportunities for USWE SPORTS and NVIDIA

0.48

Correlation Coefficient

USWE SPORTS  NVIDIA

Very weak diversification

The 3 months correlation between USWE and NVIDIA is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA 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 NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and NVIDIA go up and down completely randomly.

Pair Corralation between USWE SPORTS and NVIDIA

Assuming the 90 days horizon USWE SPORTS AB is expected to under-perform the NVIDIA. In addition to that, USWE SPORTS is 1.0 times more volatile than NVIDIA. It trades about -0.03 of its total potential returns per unit of risk. NVIDIA is currently generating about 0.12 per unit of volatility. If you would invest  5,748  in NVIDIA on October 24, 2024 and sell it today you would earn a total of  7,762  from holding NVIDIA or generate 135.04% 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.  NVIDIA

USWE SPORTS AB

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USWE SPORTS AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, USWE SPORTS reported solid returns over the last few months and may actually be approaching a breakup point.

NVIDIA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, NVIDIA is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with USWE SPORTS and NVIDIA

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

The idea behind USWE SPORTS AB and NVIDIA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.