Correlation Between Sports Entertainment and Tabcorp Holdings

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

Diversification Opportunities for Sports Entertainment and Tabcorp Holdings

-0.28

Correlation Coefficient

Sports Entertainment  Tabcorp Holdings

Very good diversification

The 3 months correlation between Sports and Tabcorp is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sports Entertainment Group and Tabcorp Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tabcorp Holdings 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 Tabcorp Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tabcorp Holdings has no effect on the direction of Sports Entertainment i.e., Sports Entertainment and Tabcorp Holdings go up and down completely randomly.

Pair Corralation between Sports Entertainment and Tabcorp Holdings

Assuming the 90 days trading horizon Sports Entertainment Group is expected to under-perform the Tabcorp Holdings. In addition to that, Sports Entertainment is 1.65 times more volatile than Tabcorp Holdings. It trades about -0.03 of its total potential returns per unit of risk. Tabcorp Holdings is currently generating about 0.05 per unit of volatility. If you would invest  58.00  in Tabcorp Holdings on December 21, 2024 and sell it today you would earn a total of  4.00  from holding Tabcorp Holdings or generate 6.9% return on investment over 90 days.

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

Sports Entertainment Group  vs.  Tabcorp Holdings

Sports Entertainment

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Tabcorp Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tabcorp Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, Tabcorp Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sports Entertainment and Tabcorp Holdings

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

The idea behind Sports Entertainment Group and Tabcorp Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..