Correlation Between Las Vegas and Melco International
Can any of the company-specific risk be diversified away by investing in both Las Vegas and Melco International 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 Melco International 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 Melco International Development, you can compare the effects of market volatilities on Las Vegas and Melco International 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 Melco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Las Vegas and Melco International.
Diversification Opportunities for Las Vegas and Melco International
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Las and Melco is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Las Vegas Sands and Melco International Developmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melco International 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 Melco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melco International has no effect on the direction of Las Vegas i.e., Las Vegas and Melco International go up and down completely randomly.
Pair Corralation between Las Vegas and Melco International
Considering the 90-day investment horizon Las Vegas Sands is expected to under-perform the Melco International. But the stock apears to be less risky and, when comparing its historical volatility, Las Vegas Sands is 2.22 times less risky than Melco International. The stock trades about -0.22 of its potential returns per unit of risk. The Melco International Development is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 64.00 in Melco International Development on August 27, 2024 and sell it today you would lose (3.00) from holding Melco International Development or give up 4.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Las Vegas Sands vs. Melco International Developmen
Performance |
| Timeline |
| Las Vegas Sands |
| Melco International |
Las Vegas and Melco International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Las Vegas and Melco International
The main advantage of trading using opposite Las Vegas and Melco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Las Vegas position performs unexpectedly, Melco International 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 Melco International will offset losses from the drop in Melco International'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 |
| Melco International vs. SJM Holdings Ltd | Melco International vs. Studio City International | Melco International vs. Monarch Casino Resort | Melco International vs. Playa Hotels Resorts |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Stocks Directory Find actively traded stocks across global markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |