Correlation Between Intuitive Machines and ESE Entertainment

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

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

Diversification Opportunities for Intuitive Machines and ESE Entertainment

-0.8

Correlation Coefficient

Intuitive Machines  ESE Entertainment

Pay attention - limited upside

The 3 months correlation between Intuitive and ESE is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Machines and ESE Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESE Entertainment and Intuitive Machines 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 Intuitive Machines are associated (or correlated) with ESE Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESE Entertainment has no effect on the direction of Intuitive Machines i.e., Intuitive Machines and ESE Entertainment go up and down completely randomly.

Pair Corralation between Intuitive Machines and ESE Entertainment

Given the investment horizon of 90 days Intuitive Machines is expected to generate 1.02 times more return on investment than ESE Entertainment. However, Intuitive Machines is 1.02 times more volatile than ESE Entertainment. It trades about 0.14 of its potential returns per unit of risk. ESE Entertainment is currently generating about -0.12 per unit of risk. If you would invest  803.00  in Intuitive Machines on September 21, 2024 and sell it today you would earn a total of  475.00  from holding Intuitive Machines or generate 59.15% return on investment over 90 days.

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

Intuitive Machines  vs.  ESE Entertainment

Intuitive Machines

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Machines are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Intuitive Machines reported solid returns over the last few months and may actually be approaching a breakup point.

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. Despite fragile performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Intuitive Machines and ESE Entertainment

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

The idea behind Intuitive Machines and ESE 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.