Correlation Between Rush Street and Madison Small
Can any of the company-specific risk be diversified away by investing in both Rush Street and Madison Small 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 Madison Small 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 Madison Small Cap, you can compare the effects of market volatilities on Rush Street and Madison Small 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 Madison Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Street and Madison Small.
Diversification Opportunities for Rush Street and Madison Small
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rush and Madison is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and Madison Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Small Cap 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 Madison Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Small Cap has no effect on the direction of Rush Street i.e., Rush Street and Madison Small go up and down completely randomly.
Pair Corralation between Rush Street and Madison Small
Considering the 90-day investment horizon Rush Street Interactive is expected to generate 2.62 times more return on investment than Madison Small. However, Rush Street is 2.62 times more volatile than Madison Small Cap. It trades about 0.25 of its potential returns per unit of risk. Madison Small Cap is currently generating about 0.2 per unit of risk. If you would invest 892.00 in Rush Street Interactive on August 28, 2024 and sell it today you would earn a total of 488.00 from holding Rush Street Interactive or generate 54.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
Rush Street Interactive vs. Madison Small Cap
Performance |
| Timeline |
| Rush Street Interactive |
| Madison Small Cap |
Rush Street and Madison Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rush Street and Madison Small
The main advantage of trading using opposite Rush Street and Madison Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rush Street position performs unexpectedly, Madison Small 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 Madison Small will offset losses from the drop in Madison Small's long position.| Rush Street vs. Genius Sports | Rush Street vs. Gan | Rush Street vs. Ballys Corp | Rush Street vs. Hims Hers Health |
| Madison Small vs. Invesco Global Real | Madison Small vs. Mainstay High Yield | Madison Small vs. Mfs Emerging Markets | Madison Small vs. Amg Timessquare Mid |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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