Correlation Between Rush Street and Portillos

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

Diversification Opportunities for Rush Street and Portillos

-0.05

Correlation Coefficient

Rush Street  Portillos

Good diversification

The 3 months correlation between Rush and Portillos is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and Portillos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portillos 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 Portillos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portillos has no effect on the direction of Rush Street i.e., Rush Street and Portillos go up and down completely randomly.

Pair Corralation between Rush Street and Portillos

Considering the 90-day investment horizon Rush Street Interactive is expected to under-perform the Portillos. In addition to that, Rush Street is 1.01 times more volatile than Portillos. It trades about -0.07 of its total potential returns per unit of risk. Portillos is currently generating about 0.14 per unit of volatility. If you would invest  910.00  in Portillos on December 29, 2024 and sell it today you would earn a total of  335.00  from holding Portillos or generate 36.81% return on investment over 90 days.

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

Rush Street Interactive  vs.  Portillos

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.

Portillos

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Portillos are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Portillos displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rush Street and Portillos

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

The idea behind Rush Street Interactive and Portillos 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.