Correlation Between Elray Resources and Entain Plc

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

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

Diversification Opportunities for Elray Resources and Entain Plc

-0.38

Correlation Coefficient

Elray Resources  Entain Plc

Very good diversification

The 3 months correlation between Elray and Entain is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Elray Resources and Entain Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entain Plc and Elray Resources 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 Elray Resources 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 Elray Resources i.e., Elray Resources and Entain Plc go up and down completely randomly.

Pair Corralation between Elray Resources and Entain Plc

Given the investment horizon of 90 days Elray Resources is expected to generate 4.86 times more return on investment than Entain Plc. However, Elray Resources is 4.86 times more volatile than Entain Plc. It trades about 0.09 of its potential returns per unit of risk. Entain Plc is currently generating about -0.12 per unit of risk. If you would invest  0.04  in Elray Resources on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Elray Resources or generate 0.0% return on investment over 90 days.

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

Elray Resources  vs.  Entain Plc

Elray Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Elray Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Elray Resources sustained solid returns over the last few months and may actually be approaching a breakup point.

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 Elray Resources and Entain Plc

The main advantage of trading using opposite Elray Resources and Entain Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elray Resources 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 Elray Resources 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.