Correlation Between Studio City and MGM China
Can any of the company-specific risk be diversified away by investing in both Studio City and MGM China 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 Studio City and MGM China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Studio City International and MGM China Holdings, you can compare the effects of market volatilities on Studio City and MGM China 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 Studio City with a short position of MGM China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Studio City and MGM China.
Diversification Opportunities for Studio City and MGM China
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Studio and MGM is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Studio City International and MGM China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGM China Holdings and Studio City 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 Studio City International are associated (or correlated) with MGM China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGM China Holdings has no effect on the direction of Studio City i.e., Studio City and MGM China go up and down completely randomly.
Pair Corralation between Studio City and MGM China
Considering the 90-day investment horizon Studio City International is expected to generate 1.28 times more return on investment than MGM China. However, Studio City is 1.28 times more volatile than MGM China Holdings. It trades about 0.05 of its potential returns per unit of risk. MGM China Holdings is currently generating about 0.03 per unit of risk. If you would invest 478.00 in Studio City International on August 25, 2024 and sell it today you would earn a total of 222.00 from holding Studio City International or generate 46.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 67.78% |
| Values | Daily Returns |
Studio City International vs. MGM China Holdings
Performance |
| Timeline |
| Studio City International |
| MGM China Holdings |
Studio City and MGM China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Studio City and MGM China
The main advantage of trading using opposite Studio City and MGM China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Studio City position performs unexpectedly, MGM China 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 MGM China will offset losses from the drop in MGM China's long position.| Studio City vs. Golden Entertainment | Studio City vs. Red Rock Resorts | Studio City vs. Century Casinos | Studio City vs. Ballys Corp |
| MGM China vs. SJM Holdings Ltd | MGM China vs. Studio City International | MGM China vs. Monarch Casino Resort | MGM China vs. Playa Hotels Resorts |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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