Correlation Between Rush Street and First Trust
Can any of the company-specific risk be diversified away by investing in both Rush Street and First Trust 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 First Trust 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 First Trust NASDAQ, you can compare the effects of market volatilities on Rush Street and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Street and First Trust.
Diversification Opportunities for Rush Street and First Trust
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rush and First is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and First Trust NASDAQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust NASDAQ 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust NASDAQ has no effect on the direction of Rush Street i.e., Rush Street and First Trust go up and down completely randomly.
Pair Corralation between Rush Street and First Trust
Considering the 90-day investment horizon Rush Street Interactive is expected to generate 4.06 times more return on investment than First Trust. However, Rush Street is 4.06 times more volatile than First Trust NASDAQ. It trades about 0.35 of its potential returns per unit of risk. First Trust NASDAQ is currently generating about 0.01 per unit of risk. If you would invest 1,061 in Rush Street Interactive on August 30, 2024 and sell it today you would earn a total of 360.00 from holding Rush Street Interactive or generate 33.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Rush Street Interactive vs. First Trust NASDAQ
Performance |
| Timeline |
| Rush Street Interactive |
| First Trust NASDAQ |
Rush Street and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rush Street and First Trust
The main advantage of trading using opposite Rush Street and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rush Street position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Rush Street vs. Genius Sports | Rush Street vs. Gan | Rush Street vs. Ballys Corp | Rush Street vs. Hims Hers Health |
| First Trust vs. First Trust Global | First Trust vs. Invesco Global Clean | First Trust vs. ALPS Clean Energy | First Trust vs. SPDR Kensho Clean |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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