Correlation Between Melco Resorts and Semtech
Can any of the company-specific risk be diversified away by investing in both Melco Resorts and Semtech 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 Semtech 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 Semtech, you can compare the effects of market volatilities on Melco Resorts and Semtech 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 Semtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melco Resorts and Semtech.
Diversification Opportunities for Melco Resorts and Semtech
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Melco and Semtech is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Melco Resorts Entertainment and Semtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semtech 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 Semtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semtech has no effect on the direction of Melco Resorts i.e., Melco Resorts and Semtech go up and down completely randomly.
Pair Corralation between Melco Resorts and Semtech
Given the investment horizon of 90 days Melco Resorts Entertainment is expected to generate 0.47 times more return on investment than Semtech. However, Melco Resorts Entertainment is 2.11 times less risky than Semtech. It trades about -0.02 of its potential returns per unit of risk. Semtech is currently generating about -0.21 per unit of risk. If you would invest 578.00 in Melco Resorts Entertainment on November 28, 2024 and sell it today you would lose (18.00) from holding Melco Resorts Entertainment or give up 3.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melco Resorts Entertainment vs. Semtech
Performance |
| Timeline |
| Melco Resorts Entert |
| Semtech |
Melco Resorts and Semtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melco Resorts and Semtech
The main advantage of trading using opposite Melco Resorts and Semtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melco Resorts position performs unexpectedly, Semtech 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 Semtech will offset losses from the drop in Semtech'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 |
| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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