Correlation Between USDD and WIN

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

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

Diversification Opportunities for USDD and WIN

0.18

Correlation Coefficient

USDD  WIN

Average diversification

The 3 months correlation between USDD and WIN is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding USDD and WIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIN and USDD 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 USDD are associated (or correlated) with WIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIN has no effect on the direction of USDD i.e., USDD and WIN go up and down completely randomly.

Pair Corralation between USDD and WIN

Assuming the 90 days trading horizon USDD is expected to generate 31.2 times less return on investment than WIN. But when comparing it to its historical volatility, USDD is 5.1 times less risky than WIN. It trades about 0.01 of its potential returns per unit of risk. WIN is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.01  in WIN on April 20, 2025 and sell it today you would earn a total of  0.00  from holding WIN or generate 1.79% return on investment over 90 days.

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

USDD  vs.  WIN

USDD

Risk-Adjusted Performance

Very Weak

Over the last 90 days USDD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, USDD is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

WIN

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WIN are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, WIN may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with USDD and WIN

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

The idea behind USDD and WIN 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..