Correlation Between Las Vegas and Sands China
Can any of the company-specific risk be diversified away by investing in both Las Vegas and Sands 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 Las Vegas and Sands China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Las Vegas Sands and Sands China, you can compare the effects of market volatilities on Las Vegas and Sands 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 Las Vegas with a short position of Sands China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Las Vegas and Sands China.
Diversification Opportunities for Las Vegas and Sands China
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Las and Sands is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Las Vegas Sands and Sands China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sands China and Las Vegas 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 Las Vegas Sands are associated (or correlated) with Sands China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sands China has no effect on the direction of Las Vegas i.e., Las Vegas and Sands China go up and down completely randomly.
Pair Corralation between Las Vegas and Sands China
Assuming the 90 days horizon Las Vegas Sands is expected to generate 1.56 times more return on investment than Sands China. However, Las Vegas is 1.56 times more volatile than Sands China. It trades about -0.18 of its potential returns per unit of risk. Sands China is currently generating about -0.31 per unit of risk. If you would invest 4,851 in Las Vegas Sands on November 2, 2024 and sell it today you would lose (416.00) from holding Las Vegas Sands or give up 8.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Las Vegas Sands vs. Sands China
Performance |
| Timeline |
| Las Vegas Sands |
| Sands China |
Las Vegas and Sands China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Las Vegas and Sands China
The main advantage of trading using opposite Las Vegas and Sands China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Las Vegas position performs unexpectedly, Sands 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 Sands China will offset losses from the drop in Sands China's long position.| Las Vegas vs. Galaxy Entertainment Group | Las Vegas vs. Sands China | Las Vegas vs. MGM Resorts International | Las Vegas vs. Wynn Resorts Limited |
| Sands China vs. Charter Communications | Sands China vs. GEELY AUTOMOBILE | Sands China vs. SEI INVESTMENTS | Sands China vs. Keck Seng Investments |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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