Correlation Between Monarch Casino and Melco International
Can any of the company-specific risk be diversified away by investing in both Monarch Casino and Melco International 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 Monarch Casino and Melco International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monarch Casino Resort and Melco International Development, you can compare the effects of market volatilities on Monarch Casino and Melco International 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 Monarch Casino with a short position of Melco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monarch Casino and Melco International.
Diversification Opportunities for Monarch Casino and Melco International
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Monarch and Melco is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Monarch Casino Resort and Melco International Developmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melco International and Monarch Casino 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 Monarch Casino Resort are associated (or correlated) with Melco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melco International has no effect on the direction of Monarch Casino i.e., Monarch Casino and Melco International go up and down completely randomly.
Pair Corralation between Monarch Casino and Melco International
Given the investment horizon of 90 days Monarch Casino Resort is expected to generate 0.53 times more return on investment than Melco International. However, Monarch Casino Resort is 1.89 times less risky than Melco International. It trades about 0.12 of its potential returns per unit of risk. Melco International Development is currently generating about -0.07 per unit of risk. If you would invest 6,705 in Monarch Casino Resort on August 30, 2024 and sell it today you would earn a total of 1,694 from holding Monarch Casino Resort or generate 25.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monarch Casino Resort vs. Melco International Developmen
Performance |
| Timeline |
| Monarch Casino Resort |
| Melco International |
Monarch Casino and Melco International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monarch Casino and Melco International
The main advantage of trading using opposite Monarch Casino and Melco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monarch Casino position performs unexpectedly, Melco International 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 Melco International will offset losses from the drop in Melco International's long position.| Monarch Casino vs. Red Rock Resorts | Monarch Casino vs. Full House Resorts | Monarch Casino vs. Ballys Corp | Monarch Casino vs. Golden Entertainment |
| Melco International vs. Las Vegas Sands | Melco International vs. MGM Resorts International | Melco International vs. Caesars Entertainment | Melco International vs. Wynn Resorts Limited |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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