Correlation Between Sports Entertainment and Horseshoe Metals

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

By analyzing existing cross correlation between Sports Entertainment Group and Horseshoe Metals, you can compare the effects of market volatilities on Sports Entertainment and Horseshoe Metals 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 Sports Entertainment with a short position of Horseshoe Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sports Entertainment and Horseshoe Metals.

Diversification Opportunities for Sports Entertainment and Horseshoe Metals

-0.76

Correlation Coefficient

Sports Entertainment  Horseshoe Metals

Pay attention - limited upside

The 3 months correlation between Sports and Horseshoe is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sports Entertainment Group and Horseshoe Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horseshoe Metals and Sports Entertainment 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 Sports Entertainment Group are associated (or correlated) with Horseshoe Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horseshoe Metals has no effect on the direction of Sports Entertainment i.e., Sports Entertainment and Horseshoe Metals go up and down completely randomly.

Pair Corralation between Sports Entertainment and Horseshoe Metals

Assuming the 90 days trading horizon Sports Entertainment is expected to generate 8.4 times less return on investment than Horseshoe Metals. But when comparing it to its historical volatility, Sports Entertainment Group is 1.66 times less risky than Horseshoe Metals. It trades about 0.03 of its potential returns per unit of risk. Horseshoe Metals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1.20  in Horseshoe Metals on October 9, 2024 and sell it today you would earn a total of  0.20  from holding Horseshoe Metals or generate 16.67% return on investment over 90 days.

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

Sports Entertainment Group  vs.  Horseshoe Metals

Sports Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sports Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Horseshoe Metals

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Horseshoe Metals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Horseshoe Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sports Entertainment and Horseshoe Metals

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

The idea behind Sports Entertainment Group and Horseshoe Metals 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.