Correlation Between Rush Street and Sp Smallcap

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

Diversification Opportunities for Rush Street and Sp Smallcap

0.77

Correlation Coefficient

Rush Street  Sp Smallcap

Poor diversification

The 3 months correlation between Rush and SMCIX is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and Sp Smallcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Smallcap Index 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 Sp Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Smallcap Index has no effect on the direction of Rush Street i.e., Rush Street and Sp Smallcap go up and down completely randomly.

Pair Corralation between Rush Street and Sp Smallcap

Considering the 90-day investment horizon Rush Street Interactive is expected to generate 2.99 times more return on investment than Sp Smallcap. However, Rush Street is 2.99 times more volatile than Sp Smallcap Index. It trades about 0.09 of its potential returns per unit of risk. Sp Smallcap Index is currently generating about 0.04 per unit of risk. If you would invest  354.00  in Rush Street Interactive on August 29, 2024 and sell it today you would earn a total of  1,067  from holding Rush Street Interactive or generate 301.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Rush Street Interactive  vs.  Sp Smallcap Index

Rush Street Interactive

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rush Street Interactive are ranked lower than 19 (%) 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.

Sp Smallcap Index

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sp Smallcap Index are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Sp Smallcap may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Rush Street and Sp Smallcap

The main advantage of trading using opposite Rush Street and Sp Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rush Street position performs unexpectedly, Sp Smallcap 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 Sp Smallcap will offset losses from the drop in Sp Smallcap's long position.

The idea behind Rush Street Interactive and Sp Smallcap Index 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.