Correlation Between Delta Air and MGM Resorts
Can any of the company-specific risk be diversified away by investing in both Delta Air and MGM Resorts 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 Delta Air and MGM Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Air Lines and MGM Resorts International, you can compare the effects of market volatilities on Delta Air and MGM Resorts 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 Delta Air with a short position of MGM Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and MGM Resorts.
Diversification Opportunities for Delta Air and MGM Resorts
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Delta and MGM is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and MGM Resorts International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGM Resorts International and Delta Air 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 Delta Air Lines are associated (or correlated) with MGM Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGM Resorts International has no effect on the direction of Delta Air i.e., Delta Air and MGM Resorts go up and down completely randomly.
Pair Corralation between Delta Air and MGM Resorts
Assuming the 90 days trading horizon Delta Air Lines is expected to under-perform the MGM Resorts. In addition to that, Delta Air is 1.22 times more volatile than MGM Resorts International. It trades about 0.0 of its total potential returns per unit of risk. MGM Resorts International is currently generating about 0.01 per unit of volatility. If you would invest 74,500 in MGM Resorts International on September 12, 2024 and sell it today you would earn a total of 30.00 from holding MGM Resorts International or generate 0.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. MGM Resorts International
Performance |
| Timeline |
| Delta Air Lines |
| MGM Resorts International |
Delta Air and MGM Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and MGM Resorts
The main advantage of trading using opposite Delta Air and MGM Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, MGM Resorts 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 Resorts will offset losses from the drop in MGM Resorts' long position.| Delta Air vs. Southwest Airlines | Delta Air vs. United Airlines Holdings | Delta Air vs. Controladora Vuela Compaa |
| MGM Resorts vs. FibraHotel | MGM Resorts vs. Delta Air Lines | MGM Resorts vs. Grupo Hotelero Santa | MGM Resorts vs. Southwest Airlines |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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