Correlation Between Inter Parfums and ELDORADO

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

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

Diversification Opportunities for Inter Parfums and ELDORADO

-0.13

Correlation Coefficient

Inter Parfums  ELDORADO

Good diversification

The 3 months correlation between Inter and ELDORADO is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Inter Parfums 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 Inter Parfums 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 Inter Parfums 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 Inter Parfums i.e., Inter Parfums and ELDORADO go up and down completely randomly.

Pair Corralation between Inter Parfums and ELDORADO

Given the investment horizon of 90 days Inter Parfums is expected to under-perform the ELDORADO. In addition to that, Inter Parfums is 8.05 times more volatile than ELDORADO RESORTS INC. It trades about -0.08 of its total potential returns per unit of risk. ELDORADO RESORTS INC is currently generating about 0.1 per unit of volatility. If you would invest  10,103  in ELDORADO RESORTS INC on December 25, 2024 and sell it today you would earn a total of  120.00  from holding ELDORADO RESORTS INC or generate 1.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.67%
Values	Daily Returns

Inter Parfums  vs.  ELDORADO RESORTS INC

Inter Parfums

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inter Parfums has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

ELDORADO RESORTS INC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ELDORADO RESORTS INC are ranked lower than 7 (%) 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 newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Inter Parfums and ELDORADO

The main advantage of trading using opposite Inter Parfums and ELDORADO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Parfums 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 Inter Parfums 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.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.