Correlation Between MGM Resorts and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both MGM Resorts and Playa Hotels 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 Resorts and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGM Resorts International and Playa Hotels Resorts, you can compare the effects of market volatilities on MGM Resorts and Playa Hotels 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 Resorts with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGM Resorts and Playa Hotels.
Diversification Opportunities for MGM Resorts and Playa Hotels
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MGM and Playa is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding MGM Resorts International and Playa Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playa Hotels Resorts and MGM 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 MGM Resorts International are associated (or correlated) with Playa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playa Hotels Resorts has no effect on the direction of MGM Resorts i.e., MGM Resorts and Playa Hotels go up and down completely randomly.
Pair Corralation between MGM Resorts and Playa Hotels
Assuming the 90 days horizon MGM Resorts International is expected to under-perform the Playa Hotels. But the stock apears to be less risky and, when comparing its historical volatility, MGM Resorts International is 2.47 times less risky than Playa Hotels. The stock trades about -0.12 of its potential returns per unit of risk. The Playa Hotels Resorts is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 760.00 in Playa Hotels Resorts on October 14, 2024 and sell it today you would earn a total of 440.00 from holding Playa Hotels Resorts or generate 57.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGM Resorts International vs. Playa Hotels Resorts
Performance |
| Timeline |
| MGM Resorts International |
| Playa Hotels Resorts |
MGM Resorts and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGM Resorts and Playa Hotels
The main advantage of trading using opposite MGM Resorts and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGM Resorts position performs unexpectedly, Playa Hotels 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 Playa Hotels will offset losses from the drop in Playa Hotels' long position.| MGM Resorts vs. THRACE PLASTICS | MGM Resorts vs. APPLIED MATERIALS | MGM Resorts vs. Sumitomo Rubber Industries | MGM Resorts vs. SANOK RUBBER ZY |
| Playa Hotels vs. Aristocrat Leisure Limited | Playa Hotels vs. Air Transport Services | Playa Hotels vs. Gaming and Leisure | Playa Hotels vs. Forsys Metals 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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