Correlation Between Sands China and Monarch Casino
Can any of the company-specific risk be diversified away by investing in both Sands China and Monarch Casino 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 Sands China and Monarch Casino into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sands China Ltd and Monarch Casino Resort, you can compare the effects of market volatilities on Sands China and Monarch Casino 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 Sands China with a short position of Monarch Casino. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sands China and Monarch Casino.
Diversification Opportunities for Sands China and Monarch Casino
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sands and Monarch is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sands China Ltd and Monarch Casino Resort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monarch Casino Resort and Sands China 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 Sands China Ltd are associated (or correlated) with Monarch Casino. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monarch Casino Resort has no effect on the direction of Sands China i.e., Sands China and Monarch Casino go up and down completely randomly.
Pair Corralation between Sands China and Monarch Casino
Assuming the 90 days horizon Sands China Ltd is expected to under-perform the Monarch Casino. In addition to that, Sands China is 2.71 times more volatile than Monarch Casino Resort. It trades about -0.09 of its total potential returns per unit of risk. Monarch Casino Resort is currently generating about 0.38 per unit of volatility. If you would invest 7,912 in Monarch Casino Resort on August 29, 2024 and sell it today you would earn a total of 657.00 from holding Monarch Casino Resort or generate 8.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sands China Ltd vs. Monarch Casino Resort
Performance |
| Timeline |
| Sands China |
| Monarch Casino Resort |
Sands China and Monarch Casino Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sands China and Monarch Casino
The main advantage of trading using opposite Sands China and Monarch Casino positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sands China position performs unexpectedly, Monarch Casino 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 Monarch Casino will offset losses from the drop in Monarch Casino's long position.| Sands China vs. SJM Holdings Ltd | Sands China vs. Studio City International | Sands China vs. Monarch Casino Resort | Sands China vs. Playa Hotels Resorts |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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