Correlation Between Vail Resorts and Las Vegas
Can any of the company-specific risk be diversified away by investing in both Vail Resorts and Las Vegas 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 Vail Resorts and Las Vegas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vail Resorts and Las Vegas Sands, you can compare the effects of market volatilities on Vail Resorts and Las Vegas 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 Vail Resorts with a short position of Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vail Resorts and Las Vegas.
Diversification Opportunities for Vail Resorts and Las Vegas
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vail and Las is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Vail Resorts and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands and Vail Resorts 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 Vail Resorts are associated (or correlated) with Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Vail Resorts i.e., Vail Resorts and Las Vegas go up and down completely randomly.
Pair Corralation between Vail Resorts and Las Vegas
Considering the 90-day investment horizon Vail Resorts is expected to generate 0.71 times more return on investment than Las Vegas. However, Vail Resorts is 1.4 times less risky than Las Vegas. It trades about -0.2 of its potential returns per unit of risk. Las Vegas Sands is currently generating about -0.2 per unit of risk. If you would invest 21,650 in Vail Resorts on January 26, 2024 and sell it today you would lose (1,512) from holding Vail Resorts or give up 6.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vail Resorts vs. Las Vegas Sands
Performance |
| Timeline |
| Vail Resorts |
| Las Vegas Sands |
Vail Resorts and Las Vegas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vail Resorts and Las Vegas
The main advantage of trading using opposite Vail Resorts and Las Vegas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vail Resorts position performs unexpectedly, Las Vegas 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 Las Vegas will offset losses from the drop in Las Vegas' long position.| Vail Resorts vs. Marriot Vacations Worldwide | Vail Resorts vs. Monarch Casino Resort | Vail Resorts vs. Studio City International | Vail Resorts vs. Hilton Grand Vacations |
| Las Vegas vs. MGM Resorts International | Las Vegas vs. Caesars Entertainment | Las Vegas vs. Penn National Gaming | Las Vegas vs. Melco Resorts Entertainment |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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