Correlation Between Boeing and USWE SPORTS

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

By analyzing existing cross correlation between The Boeing and USWE SPORTS AB, you can compare the effects of market volatilities on Boeing and USWE SPORTS 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 Boeing with a short position of USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and USWE SPORTS.

Diversification Opportunities for Boeing and USWE SPORTS

0.28

Correlation Coefficient

Boeing  USWE SPORTS

Modest diversification

The 3 months correlation between Boeing and USWE is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB and Boeing 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 The Boeing are associated (or correlated) with USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of Boeing i.e., Boeing and USWE SPORTS go up and down completely randomly.

Pair Corralation between Boeing and USWE SPORTS

Assuming the 90 days trading horizon Boeing is expected to generate 1.95 times less return on investment than USWE SPORTS. But when comparing it to its historical volatility, The Boeing is 1.64 times less risky than USWE SPORTS. It trades about 0.14 of its potential returns per unit of risk. USWE SPORTS AB is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  61.00  in USWE SPORTS AB on October 25, 2024 and sell it today you would earn a total of  21.00  from holding USWE SPORTS AB or generate 34.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

The Boeing  vs.  USWE SPORTS AB

Boeing

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Boeing exhibited solid returns over the last few months and may actually be approaching a breakup point.

USWE SPORTS AB

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USWE SPORTS AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, USWE SPORTS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boeing and USWE SPORTS

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

The idea behind The Boeing and USWE SPORTS AB 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.