Correlation Between PointsBet Holdings and Entain DRC

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

By analyzing existing cross correlation between PointsBet Holdings Limited and Entain DRC PLC, you can compare the effects of market volatilities on PointsBet Holdings and Entain DRC 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 PointsBet Holdings with a short position of Entain DRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PointsBet Holdings and Entain DRC.

Diversification Opportunities for PointsBet Holdings and Entain DRC

-0.36

Correlation Coefficient

PointsBet Holdings  Entain DRC

Very good diversification

The 3 months correlation between PointsBet and Entain is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding PointsBet Holdings Limited and Entain DRC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entain DRC PLC and PointsBet Holdings 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 PointsBet Holdings Limited are associated (or correlated) with Entain DRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entain DRC PLC has no effect on the direction of PointsBet Holdings i.e., PointsBet Holdings and Entain DRC go up and down completely randomly.

Pair Corralation between PointsBet Holdings and Entain DRC

Assuming the 90 days horizon PointsBet Holdings Limited is expected to generate 2.09 times more return on investment than Entain DRC. However, PointsBet Holdings is 2.09 times more volatile than Entain DRC PLC. It trades about 0.09 of its potential returns per unit of risk. Entain DRC PLC is currently generating about -0.01 per unit of risk. If you would invest  60.00  in PointsBet Holdings Limited on December 30, 2024 and sell it today you would earn a total of  11.00  from holding PointsBet Holdings Limited or generate 18.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	69.35%
Values	Daily Returns

PointsBet Holdings Limited  vs.  Entain DRC PLC

PointsBet Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PointsBet Holdings Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, PointsBet Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Entain DRC PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Entain DRC PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Entain DRC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PointsBet Holdings and Entain DRC

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

The idea behind PointsBet Holdings Limited and Entain DRC PLC 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.