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

0.3

Correlation Coefficient

Gambling  Inspired Entertainment

Weak diversification

The 3 months correlation between Gambling and Inspired is 0.3. 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 is expected to generate 15.36 times less return on investment than Inspired Entertainment. In addition to that, Gambling is 1.37 times more volatile than Inspired Entertainment. It trades about 0.02 of its total potential returns per unit of risk. Inspired Entertainment is currently generating about 0.33 per unit of volatility. If you would invest  945.00  in Inspired Entertainment on November 28, 2024 and sell it today you would earn a total of  155.00  from holding Inspired Entertainment or generate 16.4% return on investment over 90 days.

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

Gambling Group  vs.  Inspired Entertainment

Gambling Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gambling Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Gambling may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Inspired Entertainment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inspired Entertainment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Inspired Entertainment exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.