Correlation Between MGM Resorts and Caesars Entertainment
Can any of the company-specific risk be diversified away by investing in both MGM Resorts and Caesars 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 Resorts and Caesars Entertainment 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 Caesars Entertainment, you can compare the effects of market volatilities on MGM Resorts and Caesars 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 Resorts with a short position of Caesars Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGM Resorts and Caesars Entertainment.
Diversification Opportunities for MGM Resorts and Caesars Entertainment
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MGM and Caesars is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding MGM Resorts International and Caesars Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesars Entertainment 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 Caesars Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caesars Entertainment has no effect on the direction of MGM Resorts i.e., MGM Resorts and Caesars Entertainment go up and down completely randomly.
Pair Corralation between MGM Resorts and Caesars Entertainment
Considering the 90-day investment horizon MGM Resorts International is expected to generate 0.75 times more return on investment than Caesars Entertainment. However, MGM Resorts International is 1.33 times less risky than Caesars Entertainment. It trades about -0.01 of its potential returns per unit of risk. Caesars Entertainment is currently generating about -0.02 per unit of risk. If you would invest 4,412 in MGM Resorts International on November 2, 2024 and sell it today you would lose (978.00) from holding MGM Resorts International or give up 22.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGM Resorts International vs. Caesars Entertainment
Performance |
| Timeline |
| MGM Resorts International |
| Caesars Entertainment |
MGM Resorts and Caesars Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGM Resorts and Caesars Entertainment
The main advantage of trading using opposite MGM Resorts and Caesars Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGM Resorts position performs unexpectedly, Caesars 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 Caesars Entertainment will offset losses from the drop in Caesars Entertainment's long position.| MGM Resorts vs. Wynn Resorts Limited | MGM Resorts vs. Caesars Entertainment | MGM Resorts vs. Melco Resorts Entertainment | MGM Resorts vs. Penn National Gaming |
| Caesars Entertainment vs. Las Vegas Sands | Caesars Entertainment vs. Wynn Resorts Limited | Caesars Entertainment vs. Penn National Gaming | Caesars Entertainment vs. Melco Resorts Entertainment |
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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