Correlation Between Melco Resorts and Global X
Can any of the company-specific risk be diversified away by investing in both Melco Resorts and Global X 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 Global X 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 Global X Funds, you can compare the effects of market volatilities on Melco Resorts and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melco Resorts and Global X.
Diversification Opportunities for Melco Resorts and Global X
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Melco and Global is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Melco Resorts Entertainment and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Melco Resorts i.e., Melco Resorts and Global X go up and down completely randomly.
Pair Corralation between Melco Resorts and Global X
Assuming the 90 days trading horizon Melco Resorts Entertainment is expected to under-perform the Global X. In addition to that, Melco Resorts is 2.24 times more volatile than Global X Funds. It trades about -0.03 of its total potential returns per unit of risk. Global X Funds is currently generating about 0.08 per unit of volatility. If you would invest 3,120 in Global X Funds on October 27, 2024 and sell it today you would earn a total of 2,005 from holding Global X Funds or generate 64.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.99% |
| Values | Daily Returns |
Melco Resorts Entertainment vs. Global X Funds
Performance |
| Timeline |
| Melco Resorts Entert |
| Global X Funds |
Melco Resorts and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melco Resorts and Global X
The main advantage of trading using opposite Melco Resorts and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melco Resorts position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Melco Resorts vs. Raytheon Technologies | Melco Resorts vs. GX AI TECH | Melco Resorts vs. Ryanair Holdings plc | Melco Resorts vs. Agilent Technologies |
| Global X vs. Zoom Video Communications | Global X vs. Nordon Indstrias Metalrgicas | Global X vs. Marfrig Global Foods | Global X vs. American Airlines Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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