Correlation Between Inspired Entertainment and Accel Entertainment

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

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

Diversification Opportunities for Inspired Entertainment and Accel Entertainment

0.9

Correlation Coefficient

Inspired Entertainment  Accel Entertainment

Almost no diversification

The 3 months correlation between Inspired and Accel is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Inspired Entertainment and Accel Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accel Entertainment and Inspired 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 Inspired Entertainment are associated (or correlated) with Accel Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accel Entertainment has no effect on the direction of Inspired Entertainment i.e., Inspired Entertainment and Accel Entertainment go up and down completely randomly.

Pair Corralation between Inspired Entertainment and Accel Entertainment

Given the investment horizon of 90 days Inspired Entertainment is expected to generate 1.57 times more return on investment than Accel Entertainment. However, Inspired Entertainment is 1.57 times more volatile than Accel Entertainment. It trades about 0.0 of its potential returns per unit of risk. Accel Entertainment is currently generating about -0.04 per unit of risk. If you would invest  885.00  in Inspired Entertainment on December 29, 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	Very Strong
Accuracy	100.0%
Values	Daily Returns

Inspired Entertainment  vs.  Accel Entertainment

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.

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.

Pair Trading with Inspired Entertainment and Accel Entertainment

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

The idea behind Inspired Entertainment and Accel 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.