Correlation Between Las Vegas and MGM China
Can any of the company-specific risk be diversified away by investing in both Las Vegas 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 Las Vegas and MGM 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 MGM China Holdings, you can compare the effects of market volatilities on Las Vegas 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 Las Vegas with a short position of MGM China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Las Vegas and MGM China.
Diversification Opportunities for Las Vegas and MGM China
Poor diversification
The 3 months correlation between Las and MGM is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Las Vegas Sands 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 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 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 Las Vegas i.e., Las Vegas and MGM China go up and down completely randomly.
Pair Corralation between Las Vegas and MGM China
Considering the 90-day investment horizon Las Vegas Sands is expected to under-perform the MGM China. But the stock apears to be less risky and, when comparing its historical volatility, Las Vegas Sands is 2.98 times less risky than MGM China. The stock trades about -0.01 of its potential returns per unit of risk. The MGM China Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 123.00 in MGM China Holdings on August 29, 2024 and sell it today you would lose (18.00) from holding MGM China Holdings or give up 14.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 58.02% |
| Values | Daily Returns |
Las Vegas Sands vs. MGM China Holdings
Performance |
| Timeline |
| Las Vegas Sands |
| MGM China Holdings |
Las Vegas and MGM China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Las Vegas and MGM China
The main advantage of trading using opposite Las Vegas and MGM China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Las Vegas 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.| Las Vegas vs. MGM Resorts International | Las Vegas vs. Caesars Entertainment | Las Vegas vs. Penn National Gaming | Las Vegas vs. Melco Resorts Entertainment |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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