Correlation Between Krispy Kreme and Melco Resorts
Can any of the company-specific risk be diversified away by investing in both Krispy Kreme and Melco 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 Krispy Kreme and Melco Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Krispy Kreme and Melco Resorts Entertainment, you can compare the effects of market volatilities on Krispy Kreme and Melco 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 Krispy Kreme with a short position of Melco Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krispy Kreme and Melco Resorts.
Diversification Opportunities for Krispy Kreme and Melco Resorts
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Krispy and Melco is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Krispy Kreme and Melco Resorts Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melco Resorts Entert and Krispy Kreme 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 Krispy Kreme are associated (or correlated) with Melco Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melco Resorts Entert has no effect on the direction of Krispy Kreme i.e., Krispy Kreme and Melco Resorts go up and down completely randomly.
Pair Corralation between Krispy Kreme and Melco Resorts
Given the investment horizon of 90 days Krispy Kreme is expected to generate 0.95 times more return on investment than Melco Resorts. However, Krispy Kreme is 1.05 times less risky than Melco Resorts. It trades about 0.0 of its potential returns per unit of risk. Melco Resorts Entertainment is currently generating about -0.03 per unit of risk. If you would invest 1,397 in Krispy Kreme on August 30, 2024 and sell it today you would lose (298.00) from holding Krispy Kreme or give up 21.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Krispy Kreme vs. Melco Resorts Entertainment
Performance |
| Timeline |
| Krispy Kreme |
| Melco Resorts Entert |
Krispy Kreme and Melco Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krispy Kreme and Melco Resorts
The main advantage of trading using opposite Krispy Kreme and Melco Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krispy Kreme position performs unexpectedly, Melco 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 Melco Resorts will offset losses from the drop in Melco Resorts' long position.| Krispy Kreme vs. Sendas Distribuidora SA | Krispy Kreme vs. Natural Grocers by | Krispy Kreme vs. Sprouts Farmers Market | Krispy Kreme vs. Albertsons Companies |
| Melco Resorts vs. Wynn Resorts Limited | Melco Resorts vs. MGM Resorts International | Melco Resorts vs. Caesars Entertainment | Melco Resorts vs. Penn National Gaming |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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