Correlation Between Safety Shot and Dave Busters

Can any of the company-specific risk be diversified away by investing in both Safety Shot and Dave Busters 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 Safety Shot and Dave Busters into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Safety Shot and Dave Busters

0.18

Correlation Coefficient

Safety Shot  Dave Busters

Average diversification

The 3 months correlation between Safety and Dave is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Safety Shot and Dave Busters Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Busters Enterta and Safety Shot 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 Safety Shot are associated (or correlated) with Dave Busters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Busters Enterta has no effect on the direction of Safety Shot i.e., Safety Shot and Dave Busters go up and down completely randomly.

Pair Corralation between Safety Shot and Dave Busters

Given the investment horizon of 90 days Safety Shot is expected to under-perform the Dave Busters. But the stock apears to be less risky and, when comparing its historical volatility, Safety Shot is 1.05 times less risky than Dave Busters. The stock trades about -0.15 of its potential returns per unit of risk. The Dave Busters Entertainment is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,317  in Dave Busters Entertainment on September 22, 2024 and sell it today you would lose (577.00) from holding Dave Busters Entertainment or give up 17.4% of portfolio value over 90 days.

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

Safety Shot  vs.  Dave Busters Entertainment

Safety Shot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safety Shot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Dave Busters Enterta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dave Busters Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Safety Shot and Dave Busters

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

The idea behind Safety Shot and Dave Busters 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.