Correlation Between Inspired Entertainment and Rush Street

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

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

Diversification Opportunities for Inspired Entertainment and Rush Street

-0.03

Correlation Coefficient

Inspired Entertainment  Rush Street

Good diversification

The 3 months correlation between Inspired and Rush is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Inspired Entertainment 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 Inspired 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 Inspired Entertainment 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 Inspired Entertainment i.e., Inspired Entertainment and Rush Street go up and down completely randomly.

Pair Corralation between Inspired Entertainment and Rush Street

Given the investment horizon of 90 days Inspired Entertainment is expected to under-perform the Rush Street. But the stock apears to be less risky and, when comparing its historical volatility, Inspired Entertainment is 1.24 times less risky than Rush Street. The stock trades about -0.01 of its potential returns per unit of risk. The Rush Street Interactive is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  385.00  in Rush Street Interactive on September 25, 2024 and sell it today you would earn a total of  982.00  from holding Rush Street Interactive or generate 255.06% return on investment over 90 days.

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

Inspired Entertainment  vs.  Rush Street Interactive

Inspired Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inspired Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Rush Street Interactive

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rush Street Interactive are ranked lower than 11 (%) 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 Inspired Entertainment and Rush Street

The main advantage of trading using opposite Inspired Entertainment and Rush Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspired Entertainment 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 Inspired Entertainment 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.