Correlation Between Dave Busters and Playstudios

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

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

Diversification Opportunities for Dave Busters and Playstudios

-0.35

Correlation Coefficient

Dave Busters  Playstudios

Very good diversification

The 3 months correlation between Dave and Playstudios is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Playstudios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playstudios and Dave Busters 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 Dave Busters Entertainment are associated (or correlated) with Playstudios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playstudios has no effect on the direction of Dave Busters i.e., Dave Busters and Playstudios go up and down completely randomly.

Pair Corralation between Dave Busters and Playstudios

Given the investment horizon of 90 days Dave Busters Entertainment is expected to under-perform the Playstudios. In addition to that, Dave Busters is 1.53 times more volatile than Playstudios. It trades about -0.18 of its total potential returns per unit of risk. Playstudios is currently generating about 0.2 per unit of volatility. If you would invest  181.00  in Playstudios on September 24, 2024 and sell it today you would earn a total of  31.00  from holding Playstudios or generate 17.13% return on investment over 90 days.

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

Dave Busters Entertainment  vs.  Playstudios

Dave Busters Enterta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dave Busters Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Playstudios

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playstudios are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Playstudios unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dave Busters and Playstudios

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

The idea behind Dave Busters Entertainment and Playstudios 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.