Correlation Between Rush Street and Johnson Controls
Can any of the company-specific risk be diversified away by investing in both Rush Street and Johnson Controls 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 Johnson Controls 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 Johnson Controls International, you can compare the effects of market volatilities on Rush Street and Johnson Controls 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 Johnson Controls. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Street and Johnson Controls.
Diversification Opportunities for Rush Street and Johnson Controls
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rush and Johnson is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and Johnson Controls International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Controls Int 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 Johnson Controls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Controls Int has no effect on the direction of Rush Street i.e., Rush Street and Johnson Controls go up and down completely randomly.
Pair Corralation between Rush Street and Johnson Controls
Considering the 90-day investment horizon Rush Street Interactive is expected to generate 2.0 times more return on investment than Johnson Controls. However, Rush Street is 2.0 times more volatile than Johnson Controls International. It trades about 0.36 of its potential returns per unit of risk. Johnson Controls International is currently generating about 0.27 per unit of risk. If you would invest 1,082 in Rush Street Interactive on September 1, 2024 and sell it today you would earn a total of 360.00 from holding Rush Street Interactive or generate 33.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Rush Street Interactive vs. Johnson Controls International
Performance |
| Timeline |
| Rush Street Interactive |
| Johnson Controls Int |
Rush Street and Johnson Controls Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rush Street and Johnson Controls
The main advantage of trading using opposite Rush Street and Johnson Controls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rush Street position performs unexpectedly, Johnson Controls 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 Johnson Controls will offset losses from the drop in Johnson Controls' long position.| Rush Street vs. The Wendys Co | Rush Street vs. Shake Shack | Rush Street vs. Papa Johns International | Rush Street vs. Darden Restaurants |
| Johnson Controls vs. Larsen Toubro Limited | Johnson Controls vs. Superior Plus Corp | Johnson Controls vs. NMI Holdings | Johnson Controls vs. Origin Agritech |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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