Correlation Between Rush Street and Third Avenue
Can any of the company-specific risk be diversified away by investing in both Rush Street and Third Avenue 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 Third Avenue 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 Third Avenue Real, you can compare the effects of market volatilities on Rush Street and Third Avenue 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 Third Avenue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Street and Third Avenue.
Diversification Opportunities for Rush Street and Third Avenue
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rush and Third is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and Third Avenue Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Avenue Real 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 Third Avenue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Avenue Real has no effect on the direction of Rush Street i.e., Rush Street and Third Avenue go up and down completely randomly.
Pair Corralation between Rush Street and Third Avenue
Considering the 90-day investment horizon Rush Street Interactive is expected to generate 3.37 times more return on investment than Third Avenue. However, Rush Street is 3.37 times more volatile than Third Avenue Real. It trades about 0.12 of its potential returns per unit of risk. Third Avenue Real is currently generating about 0.1 per unit of risk. If you would invest 452.00 in Rush Street Interactive on August 29, 2024 and sell it today you would earn a total of 969.00 from holding Rush Street Interactive or generate 214.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rush Street Interactive vs. Third Avenue Real
Performance |
| Timeline |
| Rush Street Interactive |
| Third Avenue Real |
Rush Street and Third Avenue Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rush Street and Third Avenue
The main advantage of trading using opposite Rush Street and Third Avenue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rush Street position performs unexpectedly, Third Avenue 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 Third Avenue will offset losses from the drop in Third Avenue's long position.| Rush Street vs. Genius Sports | Rush Street vs. Gan | Rush Street vs. Ballys Corp | Rush Street vs. Hims Hers Health |
| Third Avenue vs. Third Avenue Small Cap | Third Avenue vs. Baron Real Estate | Third Avenue vs. Third Avenue Value | Third Avenue vs. Artisan Global Value |
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 Stocks Directory module to find actively traded stocks across global markets.
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