Correlation Between Full House and Macau Legend
Can any of the company-specific risk be diversified away by investing in both Full House and Macau Legend 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 Full House and Macau Legend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Full House Resorts and Macau Legend Development, you can compare the effects of market volatilities on Full House and Macau Legend 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 Full House with a short position of Macau Legend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Full House and Macau Legend.
Diversification Opportunities for Full House and Macau Legend
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Full and Macau is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Full House Resorts and Macau Legend Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macau Legend Development and Full House 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 Full House Resorts are associated (or correlated) with Macau Legend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macau Legend Development has no effect on the direction of Full House i.e., Full House and Macau Legend go up and down completely randomly.
Pair Corralation between Full House and Macau Legend
Considering the 90-day investment horizon Full House Resorts is expected to under-perform the Macau Legend. But the stock apears to be less risky and, when comparing its historical volatility, Full House Resorts is 2.67 times less risky than Macau Legend. The stock trades about -0.02 of its potential returns per unit of risk. The Macau Legend Development is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2.01 in Macau Legend Development on August 31, 2024 and sell it today you would lose (1.95) from holding Macau Legend Development or give up 97.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Full House Resorts vs. Macau Legend Development
Performance |
| Timeline |
| Full House Resorts |
| Macau Legend Development |
Full House and Macau Legend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Full House and Macau Legend
The main advantage of trading using opposite Full House and Macau Legend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Full House position performs unexpectedly, Macau Legend 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 Macau Legend will offset losses from the drop in Macau Legend's long position.| Full House vs. Monarch Casino Resort | Full House vs. Red Rock Resorts | Full House vs. Golden Entertainment | Full House vs. Playa Hotels Resorts |
| Macau Legend vs. Monarch Casino Resort | Macau Legend vs. Red Rock Resorts | Macau Legend vs. Full House Resorts | Macau Legend vs. Ballys Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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