Correlation Between Melco Resorts and Chevron
Can any of the company-specific risk be diversified away by investing in both Melco Resorts and Chevron 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 Chevron 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 Chevron, you can compare the effects of market volatilities on Melco Resorts and Chevron 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 Chevron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melco Resorts and Chevron.
Diversification Opportunities for Melco Resorts and Chevron
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Melco and Chevron is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Melco Resorts Entertainment and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron 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 Chevron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron has no effect on the direction of Melco Resorts i.e., Melco Resorts and Chevron go up and down completely randomly.
Pair Corralation between Melco Resorts and Chevron
Assuming the 90 days trading horizon Melco Resorts Entertainment is expected to under-perform the Chevron. But the stock apears to be less risky and, when comparing its historical volatility, Melco Resorts Entertainment is 1.98 times less risky than Chevron. The stock trades about -0.17 of its potential returns per unit of risk. The Chevron is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 9,000 in Chevron on November 5, 2024 and sell it today you would lose (280.00) from holding Chevron or give up 3.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melco Resorts Entertainment vs. Chevron
Performance |
| Timeline |
| Melco Resorts Entert |
| Chevron |
Melco Resorts and Chevron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melco Resorts and Chevron
The main advantage of trading using opposite Melco Resorts and Chevron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melco Resorts position performs unexpectedly, Chevron 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 Chevron will offset losses from the drop in Chevron's long position.| Melco Resorts vs. salesforce inc | Melco Resorts vs. CRISPR Therapeutics AG | Melco Resorts vs. Apartment Investment and | Melco Resorts vs. Academy Sports and |
| Chevron vs. Jefferies Financial Group | Chevron vs. Broadridge Financial Solutions, | Chevron vs. SVB Financial Group | Chevron vs. Datadog, |
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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