Correlation Between Wynn Resorts and Enersys

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

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

Diversification Opportunities for Wynn Resorts and Enersys

-0.61

Correlation Coefficient

Wynn Resorts  Enersys

Excellent diversification

The 3 months correlation between Wynn and Enersys is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Wynn Resorts Limited and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys and Wynn 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 Wynn Resorts Limited are associated (or correlated) with Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Wynn Resorts i.e., Wynn Resorts and Enersys go up and down completely randomly.

Pair Corralation between Wynn Resorts and Enersys

Given the investment horizon of 90 days Wynn Resorts Limited is expected to generate 1.69 times more return on investment than Enersys. However, Wynn Resorts is 1.69 times more volatile than Enersys. It trades about -0.01 of its potential returns per unit of risk. Enersys is currently generating about -0.07 per unit of risk. If you would invest  9,941  in Wynn Resorts Limited on January 25, 2024 and sell it today you would lose (59.00) from holding Wynn Resorts Limited or give up 0.59% of portfolio value over 90 days.

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

Wynn Resorts Limited  vs.  Enersys

Wynn Resorts Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wynn Resorts Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Wynn Resorts is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Enersys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enersys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Enersys is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wynn Resorts and Enersys

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

The idea behind Wynn Resorts Limited and Enersys 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.