Correlation Between Rush Street and STMicroelectronics

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

Diversification Opportunities for Rush Street and STMicroelectronics

-0.53

Correlation Coefficient

Rush Street  STMicroelectronics

Excellent diversification

The 3 months correlation between Rush and STMicroelectronics is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics 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 STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of Rush Street i.e., Rush Street and STMicroelectronics go up and down completely randomly.

Pair Corralation between Rush Street and STMicroelectronics

Considering the 90-day investment horizon Rush Street Interactive is expected to generate 1.54 times more return on investment than STMicroelectronics. However, Rush Street is 1.54 times more volatile than STMicroelectronics NV. It trades about 0.03 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about 0.02 per unit of risk. If you would invest  588.00  in Rush Street Interactive on February 5, 2024 and sell it today you would earn a total of  198.00  from holding Rush Street Interactive or generate 33.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Rush Street Interactive  vs.  STMicroelectronics NV

Rush Street Interactive

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rush Street Interactive are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Rush Street demonstrated solid returns over the last few months and may actually be approaching a breakup point.

STMicroelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STMicroelectronics NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Rush Street and STMicroelectronics

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

The idea behind Rush Street Interactive and STMicroelectronics NV 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.