Correlation Between Golden Entertainment and MGM Resorts
Can any of the company-specific risk be diversified away by investing in both Golden Entertainment 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 Golden Entertainment and MGM Resorts 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 Resorts International, you can compare the effects of market volatilities on Golden Entertainment 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 Golden Entertainment with a short position of MGM Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Entertainment and MGM Resorts.
Diversification Opportunities for Golden Entertainment and MGM Resorts
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Golden and MGM is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Golden Entertainment 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 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 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 Golden Entertainment i.e., Golden Entertainment and MGM Resorts go up and down completely randomly.
Pair Corralation between Golden Entertainment and MGM Resorts
Given the investment horizon of 90 days Golden Entertainment is expected to generate 0.89 times more return on investment than MGM Resorts. However, Golden Entertainment is 1.12 times less risky than MGM Resorts. It trades about 0.05 of its potential returns per unit of risk. MGM Resorts International is currently generating about -0.01 per unit of risk. If you would invest 2,970 in Golden Entertainment on August 30, 2024 and sell it today you would earn a total of 356.00 from holding Golden Entertainment or generate 11.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Entertainment vs. MGM Resorts International
Performance |
| Timeline |
| Golden Entertainment |
| MGM Resorts International |
Golden Entertainment and MGM Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Entertainment and MGM Resorts
The main advantage of trading using opposite Golden Entertainment and MGM Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Entertainment 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.| Golden Entertainment vs. Chipotle Mexican Grill | Golden Entertainment vs. Yum Brands | Golden Entertainment vs. The Wendys Co | Golden Entertainment vs. McDonalds |
| MGM Resorts vs. Wynn Resorts Limited | MGM Resorts vs. Caesars Entertainment | MGM Resorts vs. Melco Resorts Entertainment | MGM 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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