Correlation Between Rush Street and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Rush Street and Metropolitan West 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 Metropolitan West 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 Metropolitan West Total, you can compare the effects of market volatilities on Rush Street and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Street and Metropolitan West.
Diversification Opportunities for Rush Street and Metropolitan West
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rush and Metropolitan is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and Metropolitan West Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West Total 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 Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West Total has no effect on the direction of Rush Street i.e., Rush Street and Metropolitan West go up and down completely randomly.
Pair Corralation between Rush Street and Metropolitan West
Considering the 90-day investment horizon Rush Street Interactive is expected to generate 10.94 times more return on investment than Metropolitan West. However, Rush Street is 10.94 times more volatile than Metropolitan West Total. It trades about 0.36 of its potential returns per unit of risk. Metropolitan West Total is currently generating about -0.06 per unit of risk. If you would invest 1,040 in Rush Street Interactive on August 28, 2024 and sell it today you would earn a total of 340.00 from holding Rush Street Interactive or generate 32.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Rush Street Interactive vs. Metropolitan West Total
Performance |
| Timeline |
| Rush Street Interactive |
| Metropolitan West Total |
Rush Street and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rush Street and Metropolitan West
The main advantage of trading using opposite Rush Street and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rush Street position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Rush Street vs. Genius Sports | Rush Street vs. Gan | Rush Street vs. Ballys Corp | Rush Street vs. Hims Hers Health |
| Metropolitan West vs. Europacific Growth Fund | Metropolitan West vs. Templeton Global Bond | Metropolitan West vs. Mfs Value Fund | Metropolitan West vs. Mfs Emerging Markets |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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