Correlation Between MGM Resorts and Sands China
Can any of the company-specific risk be diversified away by investing in both MGM Resorts and Sands China 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 Sands China 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 Sands China, you can compare the effects of market volatilities on MGM Resorts and Sands China 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 Sands China. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGM Resorts and Sands China.
Diversification Opportunities for MGM Resorts and Sands China
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGM and Sands is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MGM Resorts International and Sands China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sands China 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 Sands China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sands China has no effect on the direction of MGM Resorts i.e., MGM Resorts and Sands China go up and down completely randomly.
Pair Corralation between MGM Resorts and Sands China
Considering the 90-day investment horizon MGM Resorts is expected to generate 20.27 times less return on investment than Sands China. But when comparing it to its historical volatility, MGM Resorts International is 3.38 times less risky than Sands China. It trades about 0.01 of its potential returns per unit of risk. Sands China is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 192.00 in Sands China on August 29, 2024 and sell it today you would earn a total of 50.00 from holding Sands China or generate 26.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGM Resorts International vs. Sands China
Performance |
| Timeline |
| MGM Resorts International |
| Sands China |
MGM Resorts and Sands China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGM Resorts and Sands China
The main advantage of trading using opposite MGM Resorts and Sands China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGM Resorts position performs unexpectedly, Sands China 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 Sands China will offset losses from the drop in Sands China'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 |
| Sands China vs. Las Vegas Sands | Sands China vs. MGM Resorts International | Sands China vs. Caesars Entertainment | Sands China vs. Wynn Resorts Limited |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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