Correlation Between Entain DRC and World Poker

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

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

Diversification Opportunities for Entain DRC and World Poker

0.15

Correlation Coefficient

Entain DRC  World Poker

Average diversification

The 3 months correlation between Entain and World is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Entain DRC PLC and World Poker Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Poker Fund and Entain DRC 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 DRC PLC are associated (or correlated) with World Poker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Poker Fund has no effect on the direction of Entain DRC i.e., Entain DRC and World Poker go up and down completely randomly.

Pair Corralation between Entain DRC and World Poker

Assuming the 90 days horizon Entain DRC PLC is expected to generate 0.18 times more return on investment than World Poker. However, Entain DRC PLC is 5.71 times less risky than World Poker. It trades about -0.1 of its potential returns per unit of risk. World Poker Fund is currently generating about -0.04 per unit of risk. If you would invest  1,025  in Entain DRC PLC on September 26, 2024 and sell it today you would lose (165.00) from holding Entain DRC PLC or give up 16.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Entain DRC PLC  vs.  World Poker Fund

Entain DRC PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entain DRC PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

World Poker Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days World Poker Fund has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Entain DRC and World Poker

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

The idea behind Entain DRC PLC and World Poker Fund 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.