Correlation Between ESE Entertainment and Enthusiast Gaming

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

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

Diversification Opportunities for ESE Entertainment and Enthusiast Gaming

-0.31

Correlation Coefficient

ESE Entertainment  Enthusiast Gaming

Very good diversification

The 3 months correlation between ESE and Enthusiast is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ESE Entertainment and Enthusiast Gaming Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enthusiast Gaming and ESE 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 ESE Entertainment are associated (or correlated) with Enthusiast Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enthusiast Gaming has no effect on the direction of ESE Entertainment i.e., ESE Entertainment and Enthusiast Gaming go up and down completely randomly.

Pair Corralation between ESE Entertainment and Enthusiast Gaming

Assuming the 90 days horizon ESE Entertainment is expected to under-perform the Enthusiast Gaming. In addition to that, ESE Entertainment is 1.14 times more volatile than Enthusiast Gaming Holdings. It trades about -0.15 of its total potential returns per unit of risk. Enthusiast Gaming Holdings is currently generating about 0.01 per unit of volatility. If you would invest  15.00  in Enthusiast Gaming Holdings on September 12, 2024 and sell it today you would lose (1.00) from holding Enthusiast Gaming Holdings or give up 6.67% of portfolio value over 90 days.

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

ESE Entertainment  vs.  Enthusiast Gaming Holdings

ESE Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ESE Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Enthusiast Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enthusiast Gaming Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Enthusiast Gaming is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ESE Entertainment and Enthusiast Gaming

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

The idea behind ESE Entertainment and Enthusiast Gaming 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.