Correlation Between Ark Restaurants and DraftKings

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

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

Diversification Opportunities for Ark Restaurants and DraftKings

-0.31

Correlation Coefficient

Ark Restaurants  DraftKings

Very good diversification

The 3 months correlation between Ark and DraftKings is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and DraftKings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DraftKings and Ark Restaurants 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 Ark Restaurants Corp 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 Ark Restaurants i.e., Ark Restaurants and DraftKings go up and down completely randomly.

Pair Corralation between Ark Restaurants and DraftKings

Given the investment horizon of 90 days Ark Restaurants Corp is expected to generate 0.5 times more return on investment than DraftKings. However, Ark Restaurants Corp is 2.0 times less risky than DraftKings. It trades about -0.09 of its potential returns per unit of risk. DraftKings is currently generating about -0.11 per unit of risk. If you would invest  1,388  in Ark Restaurants Corp on February 2, 2024 and sell it today you would lose (29.00) from holding Ark Restaurants Corp or give up 2.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.82%
Values	Daily Returns

Ark Restaurants Corp  vs.  DraftKings

Ark Restaurants Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ark Restaurants Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's forward-looking signals remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

DraftKings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DraftKings are ranked lower than 1 (%) 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.

Pair Trading with Ark Restaurants and DraftKings

The main advantage of trading using opposite Ark Restaurants and DraftKings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ark Restaurants 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 Ark Restaurants Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.