Correlation Between Golden Entertainment and MGM China
Can any of the company-specific risk be diversified away by investing in both Golden Entertainment 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 Golden Entertainment and MGM China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Entertainment and MGM China Holdings, you can compare the effects of market volatilities on Golden Entertainment 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 Golden Entertainment with a short position of MGM China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Entertainment and MGM China.
Diversification Opportunities for Golden Entertainment and MGM China
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Golden and MGM is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Golden Entertainment 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 Golden Entertainment 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 Golden Entertainment 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 Golden Entertainment i.e., Golden Entertainment and MGM China go up and down completely randomly.
Pair Corralation between Golden Entertainment and MGM China
Given the investment horizon of 90 days Golden Entertainment is expected to generate 0.48 times more return on investment than MGM China. However, Golden Entertainment is 2.07 times less risky than MGM China. It trades about 0.14 of its potential returns per unit of risk. MGM China Holdings is currently generating about -0.21 per unit of risk. If you would invest 3,102 in Golden Entertainment on August 29, 2024 and sell it today you would earn a total of 226.00 from holding Golden Entertainment or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Entertainment vs. MGM China Holdings
Performance |
| Timeline |
| Golden Entertainment |
| MGM China Holdings |
Golden Entertainment and MGM China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Entertainment and MGM China
The main advantage of trading using opposite Golden Entertainment and MGM China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Entertainment 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.| Golden Entertainment vs. Red Rock Resorts | Golden Entertainment vs. Century Casinos | Golden Entertainment vs. Studio City International | Golden Entertainment vs. Ballys Corp |
| MGM China vs. Studio City International | MGM China vs. Monarch Casino Resort | MGM China vs. Playa Hotels Resorts | MGM China vs. Las Vegas Sands |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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