Correlation Between MGM China and Golden Entertainment
Can any of the company-specific risk be diversified away by investing in both MGM China and Golden Entertainment 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 MGM China and Golden Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGM China Holdings and Golden Entertainment, you can compare the effects of market volatilities on MGM China and Golden Entertainment 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 MGM China with a short position of Golden Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGM China and Golden Entertainment.
Diversification Opportunities for MGM China and Golden Entertainment
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MGM and Golden is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding MGM China Holdings and Golden Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Entertainment and MGM China 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 MGM China Holdings are associated (or correlated) with Golden Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Entertainment has no effect on the direction of MGM China i.e., MGM China and Golden Entertainment go up and down completely randomly.
Pair Corralation between MGM China and Golden Entertainment
Assuming the 90 days horizon MGM China Holdings is expected to generate 1.95 times more return on investment than Golden Entertainment. However, MGM China is 1.95 times more volatile than Golden Entertainment. It trades about 0.04 of its potential returns per unit of risk. Golden Entertainment is currently generating about 0.0 per unit of risk. If you would invest 1,053 in MGM China Holdings on August 25, 2024 and sell it today you would earn a total of 417.00 from holding MGM China Holdings or generate 39.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 76.26% |
| Values | Daily Returns |
MGM China Holdings vs. Golden Entertainment
Performance |
| Timeline |
| MGM China Holdings |
| Golden Entertainment |
MGM China and Golden Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGM China and Golden Entertainment
The main advantage of trading using opposite MGM China and Golden Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGM China position performs unexpectedly, Golden Entertainment 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 Golden Entertainment will offset losses from the drop in Golden Entertainment's long position.| MGM China vs. SJM Holdings Ltd | MGM China vs. Studio City International | MGM China vs. Monarch Casino Resort | MGM China vs. Playa Hotels Resorts |
| Golden Entertainment vs. Red Rock Resorts | Golden Entertainment vs. Century Casinos | Golden Entertainment vs. Studio City International | Golden Entertainment vs. Ballys Corp |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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