Correlation Between Galaxy Entertainment and MGM Resorts
Can any of the company-specific risk be diversified away by investing in both Galaxy 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 Galaxy 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 Galaxy Entertainment Group and MGM Resorts International, you can compare the effects of market volatilities on Galaxy 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 Galaxy Entertainment with a short position of MGM Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galaxy Entertainment and MGM Resorts.
Diversification Opportunities for Galaxy Entertainment and MGM Resorts
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Galaxy and MGM is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Entertainment Group 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 Galaxy 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 Galaxy Entertainment Group 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 Galaxy Entertainment i.e., Galaxy Entertainment and MGM Resorts go up and down completely randomly.
Pair Corralation between Galaxy Entertainment and MGM Resorts
Assuming the 90 days horizon Galaxy Entertainment is expected to generate 3.05 times less return on investment than MGM Resorts. In addition to that, Galaxy Entertainment is 1.79 times more volatile than MGM Resorts International. It trades about 0.02 of its total potential returns per unit of risk. MGM Resorts International is currently generating about 0.13 per unit of volatility. If you would invest 3,687 in MGM Resorts International on September 1, 2024 and sell it today you would earn a total of 147.00 from holding MGM Resorts International or generate 3.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Galaxy Entertainment Group vs. MGM Resorts International
Performance |
| Timeline |
| Galaxy Entertainment |
| MGM Resorts International |
Galaxy Entertainment and MGM Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Galaxy Entertainment and MGM Resorts
The main advantage of trading using opposite Galaxy Entertainment and MGM Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galaxy 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.| Galaxy Entertainment vs. Las Vegas Sands | Galaxy Entertainment vs. MGM Resorts International | Galaxy Entertainment vs. Caesars Entertainment | Galaxy Entertainment vs. Wynn Resorts Limited |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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