Correlation Between ENTAIN PLC and Entain Plc

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

By analyzing existing cross correlation between ENTAIN PLC UNSPADR1 and Entain Plc, you can compare the effects of market volatilities on ENTAIN PLC and Entain Plc 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 Entain Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENTAIN PLC and Entain Plc.

Diversification Opportunities for ENTAIN PLC and Entain Plc

0.79

Correlation Coefficient

ENTAIN PLC  Entain Plc

Poor diversification

The 3 months correlation between ENTAIN and Entain is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ENTAIN PLC UNSPADR1 and Entain Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entain Plc 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 UNSPADR1 are associated (or correlated) with Entain Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entain Plc has no effect on the direction of ENTAIN PLC i.e., ENTAIN PLC and Entain Plc go up and down completely randomly.

Pair Corralation between ENTAIN PLC and Entain Plc

Assuming the 90 days trading horizon ENTAIN PLC UNSPADR1 is expected to generate 0.73 times more return on investment than Entain Plc. However, ENTAIN PLC UNSPADR1 is 1.37 times less risky than Entain Plc. It trades about -0.07 of its potential returns per unit of risk. Entain Plc is currently generating about -0.08 per unit of risk. If you would invest  890.00  in ENTAIN PLC UNSPADR1 on September 23, 2024 and sell it today you would lose (35.00) from holding ENTAIN PLC UNSPADR1 or give up 3.93% of portfolio value over 90 days.

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

ENTAIN PLC UNSPADR1  vs.  Entain Plc

ENTAIN PLC UNSPADR1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENTAIN PLC UNSPADR1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, ENTAIN PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with ENTAIN PLC and Entain Plc

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

The idea behind ENTAIN PLC UNSPADR1 and Entain Plc 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.