Correlation Between MGM Resorts and Las Vegas
Can any of the company-specific risk be diversified away by investing in both MGM Resorts and Las Vegas 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 Las Vegas 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 Las Vegas Sands, you can compare the effects of market volatilities on MGM Resorts and Las Vegas 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 Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGM Resorts and Las Vegas.
Diversification Opportunities for MGM Resorts and Las Vegas
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MGM and Las is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding MGM Resorts International and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands 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 Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of MGM Resorts i.e., MGM Resorts and Las Vegas go up and down completely randomly.
Pair Corralation between MGM Resorts and Las Vegas
Assuming the 90 days trading horizon MGM Resorts is expected to generate 20.4 times less return on investment than Las Vegas. In addition to that, MGM Resorts is 1.03 times more volatile than Las Vegas Sands. It trades about 0.01 of its total potential returns per unit of risk. Las Vegas Sands is currently generating about 0.11 per unit of volatility. If you would invest 77,591 in Las Vegas Sands on November 2, 2024 and sell it today you would earn a total of 20,669 from holding Las Vegas Sands or generate 26.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGM Resorts International vs. Las Vegas Sands
Performance |
| Timeline |
| MGM Resorts International |
| Las Vegas Sands |
MGM Resorts and Las Vegas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGM Resorts and Las Vegas
The main advantage of trading using opposite MGM Resorts and Las Vegas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGM Resorts position performs unexpectedly, Las Vegas 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 Las Vegas will offset losses from the drop in Las Vegas' long position.| MGM Resorts vs. Martin Marietta Materials | MGM Resorts vs. FibraHotel | MGM Resorts vs. Hoteles City Express | MGM Resorts vs. Southern Copper |
| Las Vegas vs. Capital One Financial | Las Vegas vs. Deutsche Bank Aktiengesellschaft | Las Vegas vs. Hoteles City Express | Las Vegas vs. Cognizant Technology Solutions |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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