Correlation Between Melco Resorts and Bread Financial
Can any of the company-specific risk be diversified away by investing in both Melco Resorts and Bread Financial 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 Melco Resorts and Bread Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melco Resorts Entertainment and Bread Financial Holdings, you can compare the effects of market volatilities on Melco Resorts and Bread Financial 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 Melco Resorts with a short position of Bread Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melco Resorts and Bread Financial.
Diversification Opportunities for Melco Resorts and Bread Financial
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Melco and Bread is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Melco Resorts Entertainment and Bread Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bread Financial Holdings and Melco Resorts 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 Melco Resorts Entertainment are associated (or correlated) with Bread Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bread Financial Holdings has no effect on the direction of Melco Resorts i.e., Melco Resorts and Bread Financial go up and down completely randomly.
Pair Corralation between Melco Resorts and Bread Financial
Assuming the 90 days trading horizon Melco Resorts Entertainment is expected to under-perform the Bread Financial. But the stock apears to be less risky and, when comparing its historical volatility, Melco Resorts Entertainment is 3.74 times less risky than Bread Financial. The stock trades about -0.17 of its potential returns per unit of risk. The Bread Financial Holdings is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 9,493 in Bread Financial Holdings on November 7, 2024 and sell it today you would lose (241.00) from holding Bread Financial Holdings or give up 2.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Melco Resorts Entertainment vs. Bread Financial Holdings
Performance |
| Timeline |
| Melco Resorts Entert |
| Bread Financial Holdings |
Melco Resorts and Bread Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melco Resorts and Bread Financial
The main advantage of trading using opposite Melco Resorts and Bread Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melco Resorts position performs unexpectedly, Bread Financial 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 Bread Financial will offset losses from the drop in Bread Financial's long position.| Melco Resorts vs. Delta Air Lines | Melco Resorts vs. Westinghouse Air Brake | Melco Resorts vs. Broadridge Financial Solutions, | Melco Resorts vs. Ross Stores |
| Bread Financial vs. Visa Inc | Bread Financial vs. Mastercard Incorporated | Bread Financial vs. American Express | Bread Financial vs. PayPal Holdings |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Transaction History View history of all your transactions and understand their impact on performance |