Correlation Between Melco Resorts and Rigetti Computing

Can any of the company-specific risk be diversified away by investing in both Melco Resorts and Rigetti Computing 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 Rigetti Computing 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 Rigetti Computing, you can compare the effects of market volatilities on Melco Resorts and Rigetti Computing 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 Rigetti Computing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melco Resorts and Rigetti Computing.

Diversification Opportunities for Melco Resorts and Rigetti Computing

-0.36

Correlation Coefficient

Melco Resorts  Rigetti Computing

Very good diversification

The 3 months correlation between Melco and Rigetti is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Melco Resorts Entertainment and Rigetti Computing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rigetti Computing 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 Rigetti Computing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rigetti Computing has no effect on the direction of Melco Resorts i.e., Melco Resorts and Rigetti Computing go up and down completely randomly.

Pair Corralation between Melco Resorts and Rigetti Computing

Given the investment horizon of 90 days Melco Resorts Entertainment is expected to under-perform the Rigetti Computing. But the stock apears to be less risky and, when comparing its historical volatility, Melco Resorts Entertainment is 1.03 times less risky than Rigetti Computing. The stock trades about -0.24 of its potential returns per unit of risk. The Rigetti Computing is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  110.00  in Rigetti Computing on March 22, 2024 and sell it today you would lose (12.00) from holding Rigetti Computing or give up 10.91% 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.  Rigetti Computing

Melco Resorts Entert

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Melco Resorts Entertainment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Melco Resorts displayed solid returns over the last few months and may actually be approaching a breakup point.

Rigetti Computing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rigetti Computing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Melco Resorts and Rigetti Computing

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

The idea behind Melco Resorts Entertainment and Rigetti Computing 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.