Correlation Between Rush Street and Guggenheim Alpha
Can any of the company-specific risk be diversified away by investing in both Rush Street and Guggenheim Alpha 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 Guggenheim Alpha 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 Guggenheim Alpha Opportunity, you can compare the effects of market volatilities on Rush Street and Guggenheim Alpha 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 Guggenheim Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Street and Guggenheim Alpha.
Diversification Opportunities for Rush Street and Guggenheim Alpha
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rush and Guggenheim is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and Guggenheim Alpha Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Alpha Opp 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 Guggenheim Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Alpha Opp has no effect on the direction of Rush Street i.e., Rush Street and Guggenheim Alpha go up and down completely randomly.
Pair Corralation between Rush Street and Guggenheim Alpha
Considering the 90-day investment horizon Rush Street Interactive is expected to generate 6.75 times more return on investment than Guggenheim Alpha. However, Rush Street is 6.75 times more volatile than Guggenheim Alpha Opportunity. It trades about 0.35 of its potential returns per unit of risk. Guggenheim Alpha Opportunity is currently generating about 0.15 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 | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Rush Street Interactive vs. Guggenheim Alpha Opportunity
Performance |
| Timeline |
| Rush Street Interactive |
| Guggenheim Alpha Opp |
Rush Street and Guggenheim Alpha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rush Street and Guggenheim Alpha
The main advantage of trading using opposite Rush Street and Guggenheim Alpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rush Street position performs unexpectedly, Guggenheim Alpha 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 Guggenheim Alpha will offset losses from the drop in Guggenheim Alpha's long position.| Rush Street vs. Genius Sports | Rush Street vs. Gan | Rush Street vs. Ballys Corp | Rush Street vs. Hims Hers Health |
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Guggenheim Alpha as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Guggenheim Alpha's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Guggenheim Alpha's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Guggenheim Alpha Opportunity.
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |