Correlation Between Entain Plc and Accel Entertainment

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

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

Diversification Opportunities for Entain Plc and Accel Entertainment

0.6

Correlation Coefficient

Entain Plc  Accel Entertainment

Poor diversification

The 3 months correlation between Entain and Accel is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Entain Plc and Accel Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accel Entertainment and Entain Plc 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 Entain Plc are associated (or correlated) with Accel Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accel Entertainment has no effect on the direction of Entain Plc i.e., Entain Plc and Accel Entertainment go up and down completely randomly.

Pair Corralation between Entain Plc and Accel Entertainment

Assuming the 90 days horizon Entain Plc is expected to under-perform the Accel Entertainment. In addition to that, Entain Plc is 2.15 times more volatile than Accel Entertainment. It trades about -0.08 of its total potential returns per unit of risk. Accel Entertainment is currently generating about -0.08 per unit of volatility. If you would invest  1,162  in Accel Entertainment on September 30, 2024 and sell it today you would lose (98.00) from holding Accel Entertainment or give up 8.43% of portfolio value over 90 days.

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

Entain Plc  vs.  Accel Entertainment

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 fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Accel Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Accel Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Entain Plc and Accel Entertainment

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

The idea behind Entain Plc and Accel Entertainment 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..