Correlation Between Codere Online and Entain Plc

Can any of the company-specific risk be diversified away by investing in both Codere Online 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 Codere Online and Entain Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Codere Online Corp and Entain Plc, you can compare the effects of market volatilities on Codere Online 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 Codere Online with a short position of Entain Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Codere Online and Entain Plc.

Diversification Opportunities for Codere Online and Entain Plc

0.23

Correlation Coefficient

Codere Online  Entain Plc

Modest diversification

The 3 months correlation between Codere and Entain is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Codere Online Corp and Entain Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entain Plc and Codere Online 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 Codere Online Corp 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 Codere Online i.e., Codere Online and Entain Plc go up and down completely randomly.

Pair Corralation between Codere Online and Entain Plc

Given the investment horizon of 90 days Codere Online Corp is expected to under-perform the Entain Plc. But the stock apears to be less risky and, when comparing its historical volatility, Codere Online Corp is 1.54 times less risky than Entain Plc. The stock trades about -0.11 of its potential returns per unit of risk. The Entain Plc is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,012  in Entain Plc on September 21, 2024 and sell it today you would lose (112.00) from holding Entain Plc or give up 11.07% of portfolio value over 90 days.

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

Codere Online Corp  vs.  Entain Plc

Codere Online Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Codere Online Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 Codere Online and Entain Plc

The main advantage of trading using opposite Codere Online and Entain Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Codere Online 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 Codere Online Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.