Correlation Between Gambling and Inspired Entertainment

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

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

Diversification Opportunities for Gambling and Inspired Entertainment

0.72

Correlation Coefficient

Gambling  Inspired Entertainment

Poor diversification

The 3 months correlation between Gambling and Inspired is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Gambling Group and Inspired Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspired Entertainment and Gambling 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 Gambling Group are associated (or correlated) with Inspired Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspired Entertainment has no effect on the direction of Gambling i.e., Gambling and Inspired Entertainment go up and down completely randomly.

Pair Corralation between Gambling and Inspired Entertainment

Given the investment horizon of 90 days Gambling Group is expected to under-perform the Inspired Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Gambling Group is 1.0 times less risky than Inspired Entertainment. The stock trades about -0.05 of its potential returns per unit of risk. The Inspired Entertainment is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  885.00  in Inspired Entertainment on December 30, 2024 and sell it today you would lose (18.00) from holding Inspired Entertainment or give up 2.03% of portfolio value over 90 days.

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

Gambling Group  vs.  Inspired Entertainment

Gambling Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gambling Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Inspired Entertainment

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Gambling and Inspired Entertainment

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

The idea behind Gambling Group and Inspired Entertainment 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.