Correlation Between American Vanguard and ELDORADO

Can any of the company-specific risk be diversified away by investing in both American Vanguard and ELDORADO 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 American Vanguard and ELDORADO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Vanguard and ELDORADO RESORTS INC, you can compare the effects of market volatilities on American Vanguard and ELDORADO 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 American Vanguard with a short position of ELDORADO. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Vanguard and ELDORADO.

Diversification Opportunities for American Vanguard and ELDORADO

0.46

Correlation Coefficient

American Vanguard  ELDORADO

Very weak diversification

The 3 months correlation between American and ELDORADO is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding American Vanguard and ELDORADO RESORTS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELDORADO RESORTS INC and American Vanguard 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 American Vanguard are associated (or correlated) with ELDORADO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELDORADO RESORTS INC has no effect on the direction of American Vanguard i.e., American Vanguard and ELDORADO go up and down completely randomly.

Pair Corralation between American Vanguard and ELDORADO

Considering the 90-day investment horizon American Vanguard is expected to generate 17.57 times more return on investment than ELDORADO. However, American Vanguard is 17.57 times more volatile than ELDORADO RESORTS INC. It trades about 0.03 of its potential returns per unit of risk. ELDORADO RESORTS INC is currently generating about -0.21 per unit of risk. If you would invest  542.00  in American Vanguard on October 26, 2024 and sell it today you would earn a total of  19.00  from holding American Vanguard or generate 3.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.05%
Values	Daily Returns

American Vanguard  vs.  ELDORADO RESORTS INC

American Vanguard

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Vanguard are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, American Vanguard may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ELDORADO RESORTS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ELDORADO RESORTS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ELDORADO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Vanguard and ELDORADO

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

The idea behind American Vanguard and ELDORADO RESORTS INC 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.