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

0.51

Correlation Coefficient

Rush Street  Portillos

Very weak diversification

The 3 months correlation between Rush and Portillos is 0.51. 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. But the stock apears to be less risky and, when comparing its historical volatility, Rush Street Interactive is 1.32 times less risky than Portillos. The stock trades about -0.03 of its potential returns per unit of risk. The Portillos is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,155  in Portillos on November 29, 2024 and sell it today you would earn a total of  240.00  from holding Portillos or generate 20.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
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 fairly strong basic indicators, Rush Street is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Portillos

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Portillos are ranked lower than 7 (%) 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.