Correlation Between DraftKings and Carnival
Can any of the company-specific risk be diversified away by investing in both DraftKings and Carnival 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 Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DraftKings and Carnival, you can compare the effects of market volatilities on DraftKings and Carnival 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 Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of DraftKings and Carnival.
Diversification Opportunities for DraftKings and Carnival
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DraftKings and Carnival is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding DraftKings and Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival 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 Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival has no effect on the direction of DraftKings i.e., DraftKings and Carnival go up and down completely randomly.
Pair Corralation between DraftKings and Carnival
Given the investment horizon of 90 days DraftKings is expected to generate 1.43 times more return on investment than Carnival. However, DraftKings is 1.43 times more volatile than Carnival. It trades about 0.28 of its potential returns per unit of risk. Carnival is currently generating about 0.3 per unit of risk. If you would invest 3,656 in DraftKings on August 27, 2024 and sell it today you would earn a total of 653.00 from holding DraftKings or generate 17.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DraftKings vs. Carnival
Performance |
| Timeline |
| DraftKings |
| Carnival |
DraftKings and Carnival Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DraftKings and Carnival
The main advantage of trading using opposite DraftKings and Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DraftKings position performs unexpectedly, Carnival 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 Carnival will offset losses from the drop in Carnival's long position.| DraftKings vs. Light Wonder | DraftKings vs. International Game Technology | DraftKings vs. Everi Holdings | DraftKings vs. PlayAGS |
| Carnival vs. Royal Caribbean Cruises | Carnival vs. Airbnb Inc | Carnival vs. Expedia Group | Carnival vs. Booking Holdings |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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