Correlation Between Vita Coco and ELDORADO

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

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

Diversification Opportunities for Vita Coco and ELDORADO

-0.47

Correlation Coefficient

Vita Coco  ELDORADO

Very good diversification

The 3 months correlation between Vita and ELDORADO is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco 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 Vita Coco 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 Vita Coco 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 Vita Coco i.e., Vita Coco and ELDORADO go up and down completely randomly.

Pair Corralation between Vita Coco and ELDORADO

Given the investment horizon of 90 days Vita Coco is expected to generate 10.58 times more return on investment than ELDORADO. However, Vita Coco is 10.58 times more volatile than ELDORADO RESORTS INC. It trades about 0.19 of its potential returns per unit of risk. ELDORADO RESORTS INC is currently generating about 0.02 per unit of risk. If you would invest  2,778  in Vita Coco on October 5, 2024 and sell it today you would earn a total of  736.00  from holding Vita Coco or generate 26.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.97%
Values	Daily Returns

Vita Coco  vs.  ELDORADO RESORTS INC

Vita Coco

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vita Coco are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Vita Coco displayed solid returns over the last few months and may actually be approaching a breakup point.

ELDORADO RESORTS INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ELDORADO RESORTS INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Vita Coco and ELDORADO

The main advantage of trading using opposite Vita Coco and ELDORADO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vita Coco 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 Vita Coco 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.