Correlation Between Melco Resorts and Wynn Resorts
Can any of the company-specific risk be diversified away by investing in both Melco Resorts and Wynn Resorts 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 Wynn Resorts 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 Wynn Resorts Limited, you can compare the effects of market volatilities on Melco Resorts and Wynn Resorts 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 Wynn Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melco Resorts and Wynn Resorts.
Diversification Opportunities for Melco Resorts and Wynn Resorts
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Melco and Wynn is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Melco Resorts Entertainment and Wynn Resorts Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Resorts Limited 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 Wynn Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Resorts Limited has no effect on the direction of Melco Resorts i.e., Melco Resorts and Wynn Resorts go up and down completely randomly.
Pair Corralation between Melco Resorts and Wynn Resorts
Given the investment horizon of 90 days Melco Resorts Entertainment is expected to under-perform the Wynn Resorts. In addition to that, Melco Resorts is 1.08 times more volatile than Wynn Resorts Limited. It trades about -0.13 of its total potential returns per unit of risk. Wynn Resorts Limited is currently generating about -0.09 per unit of volatility. If you would invest 9,811 in Wynn Resorts Limited on October 20, 2024 and sell it today you would lose (1,344) from holding Wynn Resorts Limited or give up 13.7% 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. Wynn Resorts Limited
Performance |
| Timeline |
| Melco Resorts Entert |
| Wynn Resorts Limited |
Melco Resorts and Wynn Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melco Resorts and Wynn Resorts
The main advantage of trading using opposite Melco Resorts and Wynn Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melco Resorts position performs unexpectedly, Wynn Resorts 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 Resorts will offset losses from the drop in Wynn Resorts' 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 |
| Wynn Resorts vs. MGM Resorts International | Wynn Resorts vs. Caesars Entertainment | Wynn Resorts vs. Melco Resorts Entertainment | Wynn Resorts vs. Penn National Gaming |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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