Correlation Between MGM Resorts and Wynn Macau
Can any of the company-specific risk be diversified away by investing in both MGM Resorts and Wynn Macau 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 Wynn Macau 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 Wynn Macau, you can compare the effects of market volatilities on MGM Resorts and Wynn Macau 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 Wynn Macau. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGM Resorts and Wynn Macau.
Diversification Opportunities for MGM Resorts and Wynn Macau
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MGM and Wynn is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding MGM Resorts International and Wynn Macau in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Macau 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 Wynn Macau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Macau has no effect on the direction of MGM Resorts i.e., MGM Resorts and Wynn Macau go up and down completely randomly.
Pair Corralation between MGM Resorts and Wynn Macau
Considering the 90-day investment horizon MGM Resorts International is expected to generate 1.34 times more return on investment than Wynn Macau. However, MGM Resorts is 1.34 times more volatile than Wynn Macau. It trades about -0.08 of its potential returns per unit of risk. Wynn Macau is currently generating about -0.23 per unit of risk. If you would invest 4,010 in MGM Resorts International on August 25, 2024 and sell it today you would lose (230.00) from holding MGM Resorts International or give up 5.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGM Resorts International vs. Wynn Macau
Performance |
| Timeline |
| MGM Resorts International |
| Wynn Macau |
MGM Resorts and Wynn Macau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGM Resorts and Wynn Macau
The main advantage of trading using opposite MGM Resorts and Wynn Macau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGM Resorts position performs unexpectedly, Wynn Macau 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 Wynn Macau will offset losses from the drop in Wynn Macau'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 |
| Wynn Macau vs. Banyan Tree Holdings | Wynn Macau vs. Nagacorp | Wynn Macau vs. MGM China Holdings | Wynn Macau vs. Table Trac |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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