Correlation Between Genius Sports and Rush Street

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

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

Diversification Opportunities for Genius Sports and Rush Street

0.86

Correlation Coefficient

Genius Sports  Rush Street

Very poor diversification

The 3 months correlation between Genius and Rush is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Genius Sports and Rush Street Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rush Street Interactive and Genius Sports 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 Genius Sports are associated (or correlated) with Rush Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rush Street Interactive has no effect on the direction of Genius Sports i.e., Genius Sports and Rush Street go up and down completely randomly.

Pair Corralation between Genius Sports and Rush Street

Given the investment horizon of 90 days Genius Sports is expected to generate 1.95 times less return on investment than Rush Street. In addition to that, Genius Sports is 1.13 times more volatile than Rush Street Interactive. It trades about 0.06 of its total potential returns per unit of risk. Rush Street Interactive is currently generating about 0.13 per unit of volatility. If you would invest  1,045  in Rush Street Interactive on September 21, 2024 and sell it today you would earn a total of  269.00  from holding Rush Street Interactive or generate 25.74% return on investment over 90 days.

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

Genius Sports  vs.  Rush Street Interactive

Genius Sports

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Genius Sports are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Genius Sports demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Rush Street Interactive

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rush Street Interactive are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Rush Street demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genius Sports and Rush Street

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

The idea behind Genius Sports and Rush Street Interactive 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.