Correlation Between Rush Street and Prospector Capital

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Can any of the company-specific risk be diversified away by investing in both Rush Street and Prospector Capital 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 Prospector Capital 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 Prospector Capital Equity, you can compare the effects of market volatilities on Rush Street and Prospector Capital 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 Prospector Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Street and Prospector Capital.

Diversification Opportunities for Rush Street and Prospector Capital

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Rush and Prospector is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and Prospector Capital Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospector Capital Equity 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 Prospector Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prospector Capital Equity has no effect on the direction of Rush Street i.e., Rush Street and Prospector Capital go up and down completely randomly.

Pair Corralation between Rush Street and Prospector Capital

If you would invest  345.00  in Rush Street Interactive on August 25, 2024 and sell it today you would earn a total of  987.00  from holding Rush Street Interactive or generate 286.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy0.37%
ValuesDaily Returns

Rush Street Interactive  vs.  Prospector Capital Equity

 Performance 
       Timeline  
Rush Street Interactive 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Rush Street Interactive are ranked lower than 16 (%) 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.
Prospector Capital Equity 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Prospector Capital Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Prospector Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Rush Street and Prospector Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rush Street and Prospector Capital

The main advantage of trading using opposite Rush Street and Prospector Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rush Street position performs unexpectedly, Prospector Capital 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 Prospector Capital will offset losses from the drop in Prospector Capital's long position.
The idea behind Rush Street Interactive and Prospector Capital Equity 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.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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