Correlation Between Melco Resorts and Capital One
Can any of the company-specific risk be diversified away by investing in both Melco Resorts and Capital One 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 Capital One 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 Capital One Financial, you can compare the effects of market volatilities on Melco Resorts and Capital One 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 Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melco Resorts and Capital One.
Diversification Opportunities for Melco Resorts and Capital One
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Melco and Capital is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Melco Resorts Entertainment and Capital One Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital One Financial 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 Capital One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital One Financial has no effect on the direction of Melco Resorts i.e., Melco Resorts and Capital One go up and down completely randomly.
Pair Corralation between Melco Resorts and Capital One
Assuming the 90 days trading horizon Melco Resorts Entertainment is expected to under-perform the Capital One. In addition to that, Melco Resorts is 11.98 times more volatile than Capital One Financial. It trades about -0.45 of its total potential returns per unit of risk. Capital One Financial is currently generating about -0.24 per unit of volatility. If you would invest 56,772 in Capital One Financial on October 14, 2024 and sell it today you would lose (492.00) from holding Capital One Financial or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melco Resorts Entertainment vs. Capital One Financial
Performance |
| Timeline |
| Melco Resorts Entert |
| Capital One Financial |
Melco Resorts and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melco Resorts and Capital One
The main advantage of trading using opposite Melco Resorts and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melco Resorts position performs unexpectedly, Capital One 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 Capital One will offset losses from the drop in Capital One's long position.| Melco Resorts vs. Jefferies Financial Group | Melco Resorts vs. Liberty Broadband | Melco Resorts vs. salesforce inc | Melco Resorts vs. Truist Financial |
| Capital One vs. Melco Resorts Entertainment | Capital One vs. Electronic Arts | Capital One vs. Burlington Stores, | Capital One vs. STMicroelectronics NV |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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