Correlation Between Rush Street and H-FARM SPA

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Can any of the company-specific risk be diversified away by investing in both Rush Street and H-FARM SPA 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 Rush Street and H-FARM SPA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rush Street Interactive and H FARM SPA, you can compare the effects of market volatilities on Rush Street and H-FARM SPA 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 Rush Street with a short position of H-FARM SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Street and H-FARM SPA.

Diversification Opportunities for Rush Street and H-FARM SPA

-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Rush and H-FARM is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and H FARM SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H FARM SPA and Rush Street 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 Rush Street Interactive are associated (or correlated) with H-FARM SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H FARM SPA has no effect on the direction of Rush Street i.e., Rush Street and H-FARM SPA go up and down completely randomly.

Pair Corralation between Rush Street and H-FARM SPA

Considering the 90-day investment horizon Rush Street Interactive is expected to generate 0.77 times more return on investment than H-FARM SPA. However, Rush Street Interactive is 1.3 times less risky than H-FARM SPA. It trades about 0.13 of its potential returns per unit of risk. H FARM SPA is currently generating about 0.0 per unit of risk. If you would invest  305.00  in Rush Street Interactive on August 31, 2024 and sell it today you would earn a total of  1,137  from holding Rush Street Interactive or generate 372.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy98.16%
ValuesDaily Returns

Rush Street Interactive  vs.  H FARM SPA

 Performance 
       Timeline  
Rush Street Interactive 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Rush Street Interactive are ranked lower than 20 (%) 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.
H FARM SPA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days H FARM SPA 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 basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Rush Street and H-FARM SPA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rush Street and H-FARM SPA

The main advantage of trading using opposite Rush Street and H-FARM SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rush Street position performs unexpectedly, H-FARM SPA 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 H-FARM SPA will offset losses from the drop in H-FARM SPA's long position.
The idea behind Rush Street Interactive and H FARM SPA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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