Correlation Between Red Rock and MGM Resorts
Can any of the company-specific risk be diversified away by investing in both Red Rock and MGM 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 Red Rock and MGM Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Rock Resorts and MGM Resorts International, you can compare the effects of market volatilities on Red Rock and MGM 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 Red Rock with a short position of MGM Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Rock and MGM Resorts.
Diversification Opportunities for Red Rock and MGM Resorts
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Red and MGM is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Red Rock Resorts and MGM Resorts International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGM Resorts International and Red Rock 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 Red Rock Resorts are associated (or correlated) with MGM Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGM Resorts International has no effect on the direction of Red Rock i.e., Red Rock and MGM Resorts go up and down completely randomly.
Pair Corralation between Red Rock and MGM Resorts
Considering the 90-day investment horizon Red Rock Resorts is expected to generate 0.96 times more return on investment than MGM Resorts. However, Red Rock Resorts is 1.04 times less risky than MGM Resorts. It trades about 0.03 of its potential returns per unit of risk. MGM Resorts International is currently generating about 0.02 per unit of risk. If you would invest 4,044 in Red Rock Resorts on August 28, 2024 and sell it today you would earn a total of 1,005 from holding Red Rock Resorts or generate 24.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Rock Resorts vs. MGM Resorts International
Performance |
| Timeline |
| Red Rock Resorts |
| MGM Resorts International |
Red Rock and MGM Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Rock and MGM Resorts
The main advantage of trading using opposite Red Rock and MGM Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Rock position performs unexpectedly, MGM 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 MGM Resorts will offset losses from the drop in MGM Resorts' long position.| Red Rock vs. Golden Entertainment | Red Rock vs. Century Casinos | Red Rock vs. Studio City International | Red Rock vs. Ballys Corp |
| MGM Resorts vs. Wynn Resorts Limited | MGM Resorts vs. Caesars Entertainment | MGM Resorts vs. Melco Resorts Entertainment | MGM 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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