Correlation Between Accel Entertainment and RIOLN

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

By analyzing existing cross correlation between Accel Entertainment and RIOLN 5 09 MAR 33, you can compare the effects of market volatilities on Accel Entertainment and RIOLN 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 Accel Entertainment with a short position of RIOLN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accel Entertainment and RIOLN.

Diversification Opportunities for Accel Entertainment and RIOLN

0.26

Correlation Coefficient

Accel Entertainment  RIOLN

Modest diversification

The 3 months correlation between Accel and RIOLN is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Accel Entertainment and RIOLN 5 09 MAR 33 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RIOLN 5 09 and Accel Entertainment 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 Accel Entertainment are associated (or correlated) with RIOLN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RIOLN 5 09 has no effect on the direction of Accel Entertainment i.e., Accel Entertainment and RIOLN go up and down completely randomly.

Pair Corralation between Accel Entertainment and RIOLN

Given the investment horizon of 90 days Accel Entertainment is expected to under-perform the RIOLN. In addition to that, Accel Entertainment is 4.38 times more volatile than RIOLN 5 09 MAR 33. It trades about -0.04 of its total potential returns per unit of risk. RIOLN 5 09 MAR 33 is currently generating about -0.02 per unit of volatility. If you would invest  10,028  in RIOLN 5 09 MAR 33 on December 30, 2024 and sell it today you would lose (64.00) from holding RIOLN 5 09 MAR 33 or give up 0.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Accel Entertainment  vs.  RIOLN 5 09 MAR 33

Accel Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Accel Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Accel Entertainment is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

RIOLN 5 09

Risk-Adjusted Performance

Very Weak

Over the last 90 days RIOLN 5 09 MAR 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RIOLN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Accel Entertainment and RIOLN

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

The idea behind Accel Entertainment and RIOLN 5 09 MAR 33 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.