Correlation Between DraftKings and Gan

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

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

Diversification Opportunities for DraftKings and Gan

0.3

Correlation Coefficient

DraftKings  Gan

Weak diversification

The 3 months correlation between DraftKings and Gan is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding DraftKings and Gan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan and DraftKings 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 DraftKings are associated (or correlated) with Gan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan has no effect on the direction of DraftKings i.e., DraftKings and Gan go up and down completely randomly.

Pair Corralation between DraftKings and Gan

Given the investment horizon of 90 days DraftKings is expected to under-perform the Gan. In addition to that, DraftKings is 2.25 times more volatile than Gan. It trades about -0.09 of its total potential returns per unit of risk. Gan is currently generating about 0.04 per unit of volatility. If you would invest  183.00  in Gan on September 19, 2024 and sell it today you would earn a total of  1.00  from holding Gan or generate 0.55% return on investment over 90 days.

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

DraftKings  vs.  Gan

DraftKings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DraftKings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, DraftKings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Gan

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gan are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Gan is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DraftKings and Gan

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

The idea behind DraftKings and Gan 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.