Correlation Between Rush Street and ITM Power
Can any of the company-specific risk be diversified away by investing in both Rush Street and ITM Power 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 ITM Power 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 ITM Power Plc, you can compare the effects of market volatilities on Rush Street and ITM Power 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 ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Street and ITM Power.
Diversification Opportunities for Rush Street and ITM Power
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Rush and ITM is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and ITM Power Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power Plc 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 ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power Plc has no effect on the direction of Rush Street i.e., Rush Street and ITM Power go up and down completely randomly.
Pair Corralation between Rush Street and ITM Power
Considering the 90-day investment horizon Rush Street Interactive is expected to generate 0.92 times more return on investment than ITM Power. However, Rush Street Interactive is 1.08 times less risky than ITM Power. It trades about 0.03 of its potential returns per unit of risk. ITM Power Plc is currently generating about -0.02 per unit of risk. If you would invest 1,536 in Rush Street Interactive on November 22, 2024 and sell it today you would earn a total of 14.00 from holding Rush Street Interactive or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Rush Street Interactive vs. ITM Power Plc
Performance |
| Timeline |
| Rush Street Interactive |
| ITM Power Plc |
Rush Street and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rush Street and ITM Power
The main advantage of trading using opposite Rush Street and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rush Street position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power's long position.The idea behind Rush Street Interactive and ITM Power Plc 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.| ITM Power vs. Nel ASA | ITM Power vs. Powercell Sweden | ITM Power vs. Ballard Power Systems | ITM Power vs. Plug Power |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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