Correlation Between Melco Resorts and Golden Entertainment
Can any of the company-specific risk be diversified away by investing in both Melco Resorts and Golden 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 Melco Resorts and Golden Entertainment 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 Golden Entertainment, you can compare the effects of market volatilities on Melco Resorts and Golden 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 Melco Resorts with a short position of Golden Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melco Resorts and Golden Entertainment.
Diversification Opportunities for Melco Resorts and Golden Entertainment
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Melco and Golden is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Melco Resorts Entertainment and Golden Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Entertainment 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 Golden Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Entertainment has no effect on the direction of Melco Resorts i.e., Melco Resorts and Golden Entertainment go up and down completely randomly.
Pair Corralation between Melco Resorts and Golden Entertainment
Given the investment horizon of 90 days Melco Resorts Entertainment is expected to under-perform the Golden Entertainment. In addition to that, Melco Resorts is 2.11 times more volatile than Golden Entertainment. It trades about -0.25 of its total potential returns per unit of risk. Golden Entertainment is currently generating about 0.18 per unit of volatility. If you would invest 3,111 in Golden Entertainment on October 23, 2024 and sell it today you would earn a total of 112.00 from holding Golden Entertainment or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melco Resorts Entertainment vs. Golden Entertainment
Performance |
| Timeline |
| Melco Resorts Entert |
| Golden Entertainment |
Melco Resorts and Golden Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melco Resorts and Golden Entertainment
The main advantage of trading using opposite Melco Resorts and Golden Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melco Resorts position performs unexpectedly, Golden 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 Golden Entertainment will offset losses from the drop in Golden Entertainment's 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 |
| Golden Entertainment vs. Red Rock Resorts | Golden Entertainment vs. Century Casinos | Golden Entertainment vs. Studio City International | Golden Entertainment 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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