Correlation Between Rush Street and Entain Plc

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

Diversification Opportunities for Rush Street and Entain Plc

0.15

Correlation Coefficient

Rush Street  Entain Plc

Average diversification

The 3 months correlation between Rush and Entain is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and Entain Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entain Plc 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 Entain Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entain Plc has no effect on the direction of Rush Street i.e., Rush Street and Entain Plc go up and down completely randomly.

Pair Corralation between Rush Street and Entain Plc

Considering the 90-day investment horizon Rush Street Interactive is expected to generate 0.59 times more return on investment than Entain Plc. However, Rush Street Interactive is 1.68 times less risky than Entain Plc. It trades about 0.0 of its potential returns per unit of risk. Entain Plc is currently generating about -0.12 per unit of risk. If you would invest  1,380  in Rush Street Interactive on September 25, 2024 and sell it today you would lose (13.00) from holding Rush Street Interactive or give up 0.94% of portfolio value over 90 days.

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

Rush Street Interactive  vs.  Entain Plc

Rush Street Interactive

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rush Street Interactive are ranked lower than 11 (%) 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.

Entain Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entain Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Rush Street and Entain Plc

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

The idea behind Rush Street Interactive and Entain 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.