Correlation Between Melco Resorts and Las Vegas
Can any of the company-specific risk be diversified away by investing in both Melco Resorts and Las Vegas 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 Las Vegas 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 Las Vegas Sands, you can compare the effects of market volatilities on Melco Resorts and Las Vegas 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 Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melco Resorts and Las Vegas.
Diversification Opportunities for Melco Resorts and Las Vegas
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Melco and Las is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Melco Resorts Entertainment and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands 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 Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Melco Resorts i.e., Melco Resorts and Las Vegas go up and down completely randomly.
Pair Corralation between Melco Resorts and Las Vegas
Given the investment horizon of 90 days Melco Resorts Entertainment is expected to under-perform the Las Vegas. In addition to that, Melco Resorts is 1.78 times more volatile than Las Vegas Sands. It trades about -0.31 of its total potential returns per unit of risk. Las Vegas Sands is currently generating about -0.22 per unit of volatility. If you would invest 5,341 in Las Vegas Sands on August 27, 2024 and sell it today you would lose (333.00) from holding Las Vegas Sands or give up 6.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melco Resorts Entertainment vs. Las Vegas Sands
Performance |
| Timeline |
| Melco Resorts Entert |
| Las Vegas Sands |
Melco Resorts and Las Vegas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melco Resorts and Las Vegas
The main advantage of trading using opposite Melco Resorts and Las Vegas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melco Resorts position performs unexpectedly, Las Vegas 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 Las Vegas will offset losses from the drop in Las Vegas' 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 |
| Las Vegas vs. MGM Resorts International | Las Vegas vs. Caesars Entertainment | Las Vegas vs. Penn National Gaming | Las Vegas vs. Melco Resorts Entertainment |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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