Correlation Between MGM Resorts and Red Rock
Can any of the company-specific risk be diversified away by investing in both MGM Resorts and Red Rock 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 Red Rock 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 Red Rock Resorts, you can compare the effects of market volatilities on MGM Resorts and Red Rock 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 Red Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGM Resorts and Red Rock.
Diversification Opportunities for MGM Resorts and Red Rock
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between MGM and Red is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding MGM Resorts International and Red Rock Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Rock 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 Red Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Rock Resorts has no effect on the direction of MGM Resorts i.e., MGM Resorts and Red Rock go up and down completely randomly.
Pair Corralation between MGM Resorts and Red Rock
Considering the 90-day investment horizon MGM Resorts International is expected to under-perform the Red Rock. In addition to that, MGM Resorts is 1.08 times more volatile than Red Rock Resorts. It trades about -0.13 of its total potential returns per unit of risk. Red Rock Resorts is currently generating about -0.12 per unit of volatility. If you would invest 5,417 in Red Rock Resorts on August 28, 2024 and sell it today you would lose (368.00) from holding Red Rock Resorts or give up 6.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGM Resorts International vs. Red Rock Resorts
Performance |
| Timeline |
| MGM Resorts International |
| Red Rock Resorts |
MGM Resorts and Red Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGM Resorts and Red Rock
The main advantage of trading using opposite MGM Resorts and Red Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGM Resorts position performs unexpectedly, Red Rock 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 Red Rock will offset losses from the drop in Red Rock'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 |
| Red Rock vs. Golden Entertainment | Red Rock vs. Century Casinos | Red Rock vs. Studio City International | Red Rock vs. Ballys 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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