Correlation Between Nathans Famous and Las Vegas
Can any of the company-specific risk be diversified away by investing in both Nathans Famous 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 Nathans Famous and Las Vegas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nathans Famous and Las Vegas Sands, you can compare the effects of market volatilities on Nathans Famous 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 Nathans Famous with a short position of Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nathans Famous and Las Vegas.
Diversification Opportunities for Nathans Famous and Las Vegas
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nathans and Las is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nathans Famous 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 Nathans Famous 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 Nathans Famous 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 Nathans Famous i.e., Nathans Famous and Las Vegas go up and down completely randomly.
Pair Corralation between Nathans Famous and Las Vegas
Given the investment horizon of 90 days Nathans Famous is expected to generate 0.91 times more return on investment than Las Vegas. However, Nathans Famous is 1.1 times less risky than Las Vegas. It trades about 0.06 of its potential returns per unit of risk. Las Vegas Sands is currently generating about 0.03 per unit of risk. If you would invest 6,651 in Nathans Famous on August 27, 2024 and sell it today you would earn a total of 1,754 from holding Nathans Famous or generate 26.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nathans Famous vs. Las Vegas Sands
Performance |
| Timeline |
| Nathans Famous |
| Las Vegas Sands |
Nathans Famous and Las Vegas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nathans Famous and Las Vegas
The main advantage of trading using opposite Nathans Famous and Las Vegas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nathans Famous 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.| Nathans Famous vs. Noble Romans | Nathans Famous vs. Good Times Restaurants | Nathans Famous vs. Bagger Daves Burger | Nathans Famous vs. Flanigans Enterprises |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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