Correlation Between Melco Resorts and Century Casinos
Can any of the company-specific risk be diversified away by investing in both Melco Resorts and Century Casinos 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 Melco Resorts and Century Casinos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melco Resorts Entertainment and Century Casinos, you can compare the effects of market volatilities on Melco Resorts and Century Casinos 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 Melco Resorts with a short position of Century Casinos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melco Resorts and Century Casinos.
Diversification Opportunities for Melco Resorts and Century Casinos
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Melco and Century is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Melco Resorts Entertainment and Century Casinos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Casinos and Melco 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 Melco Resorts Entertainment are associated (or correlated) with Century Casinos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Casinos has no effect on the direction of Melco Resorts i.e., Melco Resorts and Century Casinos go up and down completely randomly.
Pair Corralation between Melco Resorts and Century Casinos
Given the investment horizon of 90 days Melco Resorts Entertainment is expected to under-perform the Century Casinos. But the stock apears to be less risky and, when comparing its historical volatility, Melco Resorts Entertainment is 1.34 times less risky than Century Casinos. The stock trades about -0.03 of its potential returns per unit of risk. The Century Casinos is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 319.00 in Century Casinos on November 3, 2024 and sell it today you would lose (5.00) from holding Century Casinos or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Melco Resorts Entertainment vs. Century Casinos
Performance |
| Timeline |
| Melco Resorts Entert |
| Century Casinos |
Melco Resorts and Century Casinos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melco Resorts and Century Casinos
The main advantage of trading using opposite Melco Resorts and Century Casinos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melco Resorts position performs unexpectedly, Century Casinos 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 Century Casinos will offset losses from the drop in Century Casinos' long position.| Melco Resorts vs. Wynn Resorts Limited | Melco Resorts vs. MGM Resorts International | Melco Resorts vs. Caesars Entertainment | Melco Resorts vs. Penn National Gaming |
| Century Casinos vs. Golden Entertainment | Century Casinos vs. Monarch Casino Resort | Century Casinos vs. Red Rock Resorts | Century Casinos vs. Studio City International |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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