Correlation Between Gambling and Portillos

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

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

Diversification Opportunities for Gambling and Portillos

0.27

Correlation Coefficient

Gambling  Portillos

Modest diversification

The 3 months correlation between Gambling and Portillos is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Gambling Group and Portillos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portillos 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 Portillos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portillos has no effect on the direction of Gambling i.e., Gambling and Portillos go up and down completely randomly.

Pair Corralation between Gambling and Portillos

Given the investment horizon of 90 days Gambling Group is expected to under-perform the Portillos. But the stock apears to be less risky and, when comparing its historical volatility, Gambling Group is 1.38 times less risky than Portillos. The stock trades about -0.05 of its potential returns per unit of risk. The Portillos is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  910.00  in Portillos on December 30, 2024 and sell it today you would earn a total of  280.00  from holding Portillos or generate 30.77% 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.  Portillos

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.

Portillos

Risk-Adjusted Performance

OK

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

Pair Trading with Gambling and Portillos

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

The idea behind Gambling Group and Portillos 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .