Correlation Between Entain Plc and Vail Resorts

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

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

Diversification Opportunities for Entain Plc and Vail Resorts

0.6

Correlation Coefficient

Entain Plc  Vail Resorts

Poor diversification

The 3 months correlation between Entain and Vail is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Entain Plc and Vail Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vail Resorts and Entain Plc 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 Entain Plc are associated (or correlated) with Vail Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vail Resorts has no effect on the direction of Entain Plc i.e., Entain Plc and Vail Resorts go up and down completely randomly.

Pair Corralation between Entain Plc and Vail Resorts

Assuming the 90 days horizon Entain Plc is expected to generate 1.5 times more return on investment than Vail Resorts. However, Entain Plc is 1.5 times more volatile than Vail Resorts. It trades about 0.0 of its potential returns per unit of risk. Vail Resorts is currently generating about -0.01 per unit of risk. If you would invest  936.00  in Entain Plc on September 23, 2024 and sell it today you would lose (87.00) from holding Entain Plc or give up 9.29% of portfolio value over 90 days.

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

Entain Plc  vs.  Vail Resorts

Entain Plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Entain Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Entain Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Vail Resorts

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vail Resorts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vail Resorts may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Entain Plc and Vail Resorts

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

The idea behind Entain Plc and Vail Resorts 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.