Correlation Between MGM Resorts and Hoteles City
Can any of the company-specific risk be diversified away by investing in both MGM Resorts and Hoteles City 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 Hoteles City 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 Hoteles City Express, you can compare the effects of market volatilities on MGM Resorts and Hoteles City 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 Hoteles City. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGM Resorts and Hoteles City.
Diversification Opportunities for MGM Resorts and Hoteles City
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGM and Hoteles is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding MGM Resorts International and Hoteles City Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoteles City Express 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 Hoteles City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoteles City Express has no effect on the direction of MGM Resorts i.e., MGM Resorts and Hoteles City go up and down completely randomly.
Pair Corralation between MGM Resorts and Hoteles City
Assuming the 90 days trading horizon MGM Resorts International is expected to generate 1.09 times more return on investment than Hoteles City. However, MGM Resorts is 1.09 times more volatile than Hoteles City Express. It trades about -0.02 of its potential returns per unit of risk. Hoteles City Express is currently generating about -0.14 per unit of risk. If you would invest 75,300 in MGM Resorts International on September 13, 2024 and sell it today you would lose (770.00) from holding MGM Resorts International or give up 1.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGM Resorts International vs. Hoteles City Express
Performance |
| Timeline |
| MGM Resorts International |
| Hoteles City Express |
MGM Resorts and Hoteles City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGM Resorts and Hoteles City
The main advantage of trading using opposite MGM Resorts and Hoteles City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGM Resorts position performs unexpectedly, Hoteles City 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 Hoteles City will offset losses from the drop in Hoteles City's long position.| MGM Resorts vs. Las Vegas Sands | MGM Resorts vs. Grupe SAB de | MGM Resorts vs. The Walt Disney | MGM Resorts vs. The Goodyear Tire |
| Hoteles City vs. Controladora Vuela Compaa | Hoteles City vs. Alsea SAB de | Hoteles City vs. Nemak S A | Hoteles City vs. Grupo Comercial Chedraui |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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