Correlation Between Major Drilling and ELDORADO

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

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

Diversification Opportunities for Major Drilling and ELDORADO

0.25

Correlation Coefficient

Major Drilling  ELDORADO

Modest diversification

The 3 months correlation between Major and ELDORADO is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group 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 Major Drilling 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 Major Drilling Group 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 Major Drilling i.e., Major Drilling and ELDORADO go up and down completely randomly.

Pair Corralation between Major Drilling and ELDORADO

Assuming the 90 days horizon Major Drilling Group is expected to under-perform the ELDORADO. In addition to that, Major Drilling is 3.7 times more volatile than ELDORADO RESORTS INC. It trades about -0.31 of its total potential returns per unit of risk. ELDORADO RESORTS INC is currently generating about 0.12 per unit of volatility. If you would invest  10,163  in ELDORADO RESORTS INC on October 11, 2024 and sell it today you would earn a total of  75.00  from holding ELDORADO RESORTS INC or generate 0.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Major Drilling Group  vs.  ELDORADO RESORTS INC

Major Drilling Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Major Drilling Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Major Drilling is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Major Drilling and ELDORADO

The main advantage of trading using opposite Major Drilling and ELDORADO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling 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 Major Drilling Group 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.