Correlation Between PlayAGS and DraftKings

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

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

Diversification Opportunities for PlayAGS and DraftKings

0.09

Correlation Coefficient

PlayAGS  DraftKings

Significant diversification

The 3 months correlation between PlayAGS and DraftKings is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding PlayAGS and DraftKings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DraftKings and PlayAGS 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 PlayAGS are associated (or correlated) with DraftKings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DraftKings has no effect on the direction of PlayAGS i.e., PlayAGS and DraftKings go up and down completely randomly.

Pair Corralation between PlayAGS and DraftKings

Considering the 90-day investment horizon PlayAGS is expected to generate 2.33 times more return on investment than DraftKings. However, PlayAGS is 2.33 times more volatile than DraftKings. It trades about 0.2 of its potential returns per unit of risk. DraftKings is currently generating about -0.02 per unit of risk. If you would invest  911.00  in PlayAGS on February 16, 2024 and sell it today you would earn a total of  234.00  from holding PlayAGS or generate 25.69% return on investment over 90 days.

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

PlayAGS  vs.  DraftKings

PlayAGS

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PlayAGS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, PlayAGS unveiled solid returns over the last few months and may actually be approaching a breakup point.

DraftKings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DraftKings has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with PlayAGS and DraftKings

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

The idea behind PlayAGS and DraftKings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.