Correlation Between Rush Street and Empire Global

Can any of the company-specific risk be diversified away by investing in both Rush Street and Empire Global 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 Empire Global 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 Empire Global Gaming, you can compare the effects of market volatilities on Rush Street and Empire Global 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 Empire Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Street and Empire Global.

Diversification Opportunities for Rush Street and Empire Global

-0.7

Correlation Coefficient

Rush Street  Empire Global

Excellent diversification

The 3 months correlation between Rush and Empire is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and Empire Global Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Global Gaming 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 Empire Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Global Gaming has no effect on the direction of Rush Street i.e., Rush Street and Empire Global go up and down completely randomly.

Pair Corralation between Rush Street and Empire Global

Considering the 90-day investment horizon Rush Street Interactive is expected to generate 0.45 times more return on investment than Empire Global. However, Rush Street Interactive is 2.22 times less risky than Empire Global. It trades about 0.16 of its potential returns per unit of risk. Empire Global Gaming is currently generating about -0.09 per unit of risk. If you would invest  413.00  in Rush Street Interactive on September 13, 2024 and sell it today you would earn a total of  973.00  from holding Rush Street Interactive or generate 235.59% return on investment over 90 days.

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

Rush Street Interactive  vs.  Empire Global Gaming

Rush Street Interactive

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rush Street Interactive are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Rush Street demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Empire Global Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Empire Global Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Rush Street and Empire Global

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

The idea behind Rush Street Interactive and Empire Global Gaming 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.