Correlation Between Las Vegas and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Las Vegas and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Las Vegas and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Las Vegas and Dow Jones.
Diversification Opportunities for Las Vegas and Dow Jones
Poor diversification
The 3 months correlation between Las and Dow is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Las Vegas Sands and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Las Vegas i.e., Las Vegas and Dow Jones go up and down completely randomly.
Pair Corralation between Las Vegas and Dow Jones
Assuming the 90 days horizon Las Vegas Sands is expected to generate 2.5 times more return on investment than Dow Jones. However, Las Vegas is 2.5 times more volatile than Dow Jones Industrial. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of risk. If you would invest 3,949 in Las Vegas Sands on September 3, 2024 and sell it today you would earn a total of 1,048 from holding Las Vegas Sands or generate 26.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.9% |
| Values | Daily Returns |
Las Vegas Sands vs. Dow Jones Industrial
Performance |
| Timeline |
Las Vegas and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Las Vegas Sands
Pair trading matchups for Las Vegas
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Las Vegas and Dow Jones
The main advantage of trading using opposite Las Vegas and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Las Vegas position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Las Vegas vs. Hanison Construction Holdings | Las Vegas vs. WIMFARM SA EO | Las Vegas vs. SBI Insurance Group | Las Vegas vs. Chongqing Machinery Electric |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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