Correlation Between Melco Resorts and Monarch Casino
Can any of the company-specific risk be diversified away by investing in both Melco Resorts and Monarch Casino 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 Melco Resorts and Monarch Casino into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melco Resorts Entertainment and Monarch Casino Resort, you can compare the effects of market volatilities on Melco Resorts and Monarch Casino 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 Melco Resorts with a short position of Monarch Casino. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melco Resorts and Monarch Casino.
Diversification Opportunities for Melco Resorts and Monarch Casino
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Melco and Monarch is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Melco Resorts Entertainment and Monarch Casino Resort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monarch Casino Resort and Melco 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 Melco Resorts Entertainment are associated (or correlated) with Monarch Casino. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monarch Casino Resort has no effect on the direction of Melco Resorts i.e., Melco Resorts and Monarch Casino go up and down completely randomly.
Pair Corralation between Melco Resorts and Monarch Casino
Given the investment horizon of 90 days Melco Resorts Entertainment is expected to under-perform the Monarch Casino. In addition to that, Melco Resorts is 2.21 times more volatile than Monarch Casino Resort. It trades about -0.07 of its total potential returns per unit of risk. Monarch Casino Resort is currently generating about -0.03 per unit of volatility. If you would invest 6,996 in Monarch Casino Resort on February 11, 2024 and sell it today you would lose (223.00) from holding Monarch Casino Resort or give up 3.19% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Melco Resorts Entertainment vs. Monarch Casino Resort
Performance |
Timeline |
Melco Resorts Entert |
Monarch Casino Resort |
Melco Resorts and Monarch Casino Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Melco Resorts and Monarch Casino
The main advantage of trading using opposite Melco Resorts and Monarch Casino positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melco Resorts position performs unexpectedly, Monarch Casino 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 Monarch Casino will offset losses from the drop in Monarch Casino's long position.Melco Resorts vs. Golden Entertainment | Melco Resorts vs. Marriot Vacations Worldwide | Melco Resorts vs. Vail Resorts |
Monarch Casino vs. Golden Entertainment | Monarch Casino vs. Marriot Vacations Worldwide | Monarch Casino vs. Vail Resorts |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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