Correlation Between Rush Street and Stralem Equity

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

Diversification Opportunities for Rush Street and Stralem Equity

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Rush and Stralem is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and Stralem Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stralem 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 Stralem Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stralem Equity has no effect on the direction of Rush Street i.e., Rush Street and Stralem Equity go up and down completely randomly.

Pair Corralation between Rush Street and Stralem Equity

Considering the 90-day investment horizon Rush Street Interactive is expected to generate 4.98 times more return on investment than Stralem Equity. However, Rush Street is 4.98 times more volatile than Stralem Equity Fund. It trades about 0.12 of its potential returns per unit of risk. Stralem Equity Fund is currently generating about 0.14 per unit of risk. If you would invest  322.00  in Rush Street Interactive on August 30, 2024 and sell it today you would earn a total of  1,099  from holding Rush Street Interactive or generate 341.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.75%
ValuesDaily Returns

Rush Street Interactive  vs.  Stralem Equity Fund

 Performance 
       Timeline  
Rush Street Interactive 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Rush Street Interactive are ranked lower than 18 (%) 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.
Stralem Equity 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Stralem Equity Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Stralem Equity may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Rush Street and Stralem Equity Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rush Street and Stralem Equity

The main advantage of trading using opposite Rush Street and Stralem Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rush Street position performs unexpectedly, Stralem Equity 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 Stralem Equity will offset losses from the drop in Stralem Equity's long position.
The idea behind Rush Street Interactive and Stralem Equity Fund 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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