Correlation Between Apple and Esports Entertainment
Can any of the company-specific risk be diversified away by investing in both Apple and Esports Entertainment 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 Apple and Esports Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Esports Entertainment Group, you can compare the effects of market volatilities on Apple and Esports Entertainment 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 Apple with a short position of Esports Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Esports Entertainment.
Diversification Opportunities for Apple and Esports Entertainment
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Apple and Esports is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Esports Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esports Entertainment and Apple 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 Apple Inc are associated (or correlated) with Esports Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esports Entertainment has no effect on the direction of Apple i.e., Apple and Esports Entertainment go up and down completely randomly.
Pair Corralation between Apple and Esports Entertainment
Given the investment horizon of 90 days Apple is expected to generate 18.62 times less return on investment than Esports Entertainment. But when comparing it to its historical volatility, Apple Inc is 28.2 times less risky than Esports Entertainment. It trades about 0.02 of its potential returns per unit of risk. Esports Entertainment Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,085,200 in Esports Entertainment Group on January 26, 2024 and sell it today you would lose (2,084,942) from holding Esports Entertainment Group or give up 99.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Apple Inc vs. Esports Entertainment Group
Performance |
| Timeline |
| Apple Inc |
| Esports Entertainment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Apple and Esports Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Esports Entertainment
The main advantage of trading using opposite Apple and Esports Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Esports Entertainment 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 Esports Entertainment will offset losses from the drop in Esports Entertainment's long position.The idea behind Apple Inc and Esports Entertainment Group 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.| Esports Entertainment vs. Rush Street Interactive | Esports Entertainment vs. Everi Holdings | Esports Entertainment vs. Inspired Entertainment | Esports Entertainment vs. PointsBet Holdings Limited |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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