Correlation Between Rush Street and Carnival

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

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

Diversification Opportunities for Rush Street and Carnival

0.87

Correlation Coefficient

Rush Street  Carnival

Very poor diversification

The 3 months correlation between Rush and Carnival is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival and Rush Street 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 Rush Street Interactive are associated (or correlated) with Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival has no effect on the direction of Rush Street i.e., Rush Street and Carnival go up and down completely randomly.

Pair Corralation between Rush Street and Carnival

Considering the 90-day investment horizon Rush Street Interactive is expected to generate 1.5 times more return on investment than Carnival. However, Rush Street is 1.5 times more volatile than Carnival. It trades about -0.06 of its potential returns per unit of risk. Carnival is currently generating about -0.1 per unit of risk. If you would invest  1,361  in Rush Street Interactive on December 28, 2024 and sell it today you would lose (262.00) from holding Rush Street Interactive or give up 19.25% of portfolio value over 90 days.

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

Rush Street Interactive  vs.  Carnival

Rush Street Interactive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rush Street Interactive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Carnival

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carnival has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Rush Street and Carnival

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

The idea behind Rush Street Interactive and Carnival 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.