Correlation Between Dave Busters and SPORT LISBOA

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

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

Diversification Opportunities for Dave Busters and SPORT LISBOA

-0.05

Correlation Coefficient

Dave Busters  SPORT LISBOA

Good diversification

The 3 months correlation between Dave and SPORT is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and SPORT LISBOA E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORT LISBOA E and Dave Busters 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 Dave Busters Entertainment are associated (or correlated) with SPORT LISBOA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORT LISBOA E has no effect on the direction of Dave Busters i.e., Dave Busters and SPORT LISBOA go up and down completely randomly.

Pair Corralation between Dave Busters and SPORT LISBOA

Assuming the 90 days horizon Dave Busters Entertainment is expected to under-perform the SPORT LISBOA. In addition to that, Dave Busters is 3.32 times more volatile than SPORT LISBOA E. It trades about -0.29 of its total potential returns per unit of risk. SPORT LISBOA E is currently generating about -0.16 per unit of volatility. If you would invest  328.00  in SPORT LISBOA E on October 4, 2024 and sell it today you would lose (15.00) from holding SPORT LISBOA E or give up 4.57% of portfolio value over 90 days.

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

Dave Busters Entertainment  vs.  SPORT LISBOA E

Dave Busters Enterta

Risk-Adjusted Performance

0 of 100

Very Weak

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

SPORT LISBOA E

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dave Busters and SPORT LISBOA

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

The idea behind Dave Busters Entertainment and SPORT LISBOA E 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.