Correlation Between Banyan Tree and MGM China
Can any of the company-specific risk be diversified away by investing in both Banyan Tree and MGM China 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 Banyan Tree and MGM China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banyan Tree Holdings and MGM China Holdings, you can compare the effects of market volatilities on Banyan Tree and MGM China 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 Banyan Tree with a short position of MGM China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banyan Tree and MGM China.
Diversification Opportunities for Banyan Tree and MGM China
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banyan and MGM is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Banyan Tree Holdings and MGM China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGM China Holdings and Banyan Tree 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 Banyan Tree Holdings are associated (or correlated) with MGM China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGM China Holdings has no effect on the direction of Banyan Tree i.e., Banyan Tree and MGM China go up and down completely randomly.
Pair Corralation between Banyan Tree and MGM China
Assuming the 90 days horizon Banyan Tree Holdings is expected to generate 9.26 times more return on investment than MGM China. However, Banyan Tree is 9.26 times more volatile than MGM China Holdings. It trades about 0.05 of its potential returns per unit of risk. MGM China Holdings is currently generating about 0.03 per unit of risk. If you would invest 20.00 in Banyan Tree Holdings on August 25, 2024 and sell it today you would lose (19.92) from holding Banyan Tree Holdings or give up 99.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.73% |
| Values | Daily Returns |
Banyan Tree Holdings vs. MGM China Holdings
Performance |
| Timeline |
| Banyan Tree Holdings |
| MGM China Holdings |
Banyan Tree and MGM China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banyan Tree and MGM China
The main advantage of trading using opposite Banyan Tree and MGM China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banyan Tree position performs unexpectedly, MGM China 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 MGM China will offset losses from the drop in MGM China's long position.| Banyan Tree vs. SJM Holdings Ltd | Banyan Tree vs. Studio City International | Banyan Tree vs. Monarch Casino Resort | Banyan Tree vs. Playa Hotels Resorts |
| MGM China vs. Banyan Tree Holdings | MGM China vs. Nagacorp | MGM China vs. Wynn Macau | MGM China vs. Table Trac |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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