Correlation Between Las Vegas and Melco Resorts
Can any of the company-specific risk be diversified away by investing in both Las Vegas and Melco 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 Las Vegas and Melco Resorts 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 Resorts Entertainment, you can compare the effects of market volatilities on Las Vegas and Melco 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 Las Vegas with a short position of Melco Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Las Vegas and Melco Resorts.
Diversification Opportunities for Las Vegas and Melco Resorts
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Las and Melco is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Las Vegas Sands and Melco Resorts Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melco Resorts Entert 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 Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melco Resorts Entert has no effect on the direction of Las Vegas i.e., Las Vegas and Melco Resorts go up and down completely randomly.
Pair Corralation between Las Vegas and Melco Resorts
Considering the 90-day investment horizon Las Vegas Sands is expected to generate 0.6 times more return on investment than Melco Resorts. However, Las Vegas Sands is 1.65 times less risky than Melco Resorts. It trades about -0.12 of its potential returns per unit of risk. Melco Resorts Entertainment is currently generating about -0.26 per unit of risk. If you would invest 5,341 in Las Vegas Sands on August 28, 2024 and sell it today you would lose (201.00) from holding Las Vegas Sands or give up 3.76% 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 Resorts Entertainment
Performance |
| Timeline |
| Las Vegas Sands |
| Melco Resorts Entert |
Las Vegas and Melco Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Las Vegas and Melco Resorts
The main advantage of trading using opposite Las Vegas and Melco Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Las Vegas position performs unexpectedly, Melco 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 Melco Resorts will offset losses from the drop in Melco Resorts' 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 Resorts vs. Wynn Resorts Limited | Melco Resorts vs. MGM Resorts International | Melco Resorts vs. Caesars Entertainment | Melco 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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