Correlation Between Semtech and Melco Resorts
Can any of the company-specific risk be diversified away by investing in both Semtech and Melco 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 Semtech and Melco Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semtech and Melco Resorts Entertainment, you can compare the effects of market volatilities on Semtech and Melco 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 Semtech with a short position of Melco Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semtech and Melco Resorts.
Diversification Opportunities for Semtech and Melco Resorts
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Semtech and Melco is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and Melco Resorts Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melco Resorts Entert and Semtech 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 Semtech are associated (or correlated) with Melco Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melco Resorts Entert has no effect on the direction of Semtech i.e., Semtech and Melco Resorts go up and down completely randomly.
Pair Corralation between Semtech and Melco Resorts
Given the investment horizon of 90 days Semtech is expected to generate 2.07 times more return on investment than Melco Resorts. However, Semtech is 2.07 times more volatile than Melco Resorts Entertainment. It trades about 0.28 of its potential returns per unit of risk. Melco Resorts Entertainment is currently generating about -0.19 per unit of risk. If you would invest 4,776 in Semtech on August 30, 2024 and sell it today you would earn a total of 1,644 from holding Semtech or generate 34.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Semtech vs. Melco Resorts Entertainment
Performance |
| Timeline |
| Semtech |
| Melco Resorts Entert |
Semtech and Melco Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semtech and Melco Resorts
The main advantage of trading using opposite Semtech and Melco Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semtech position performs unexpectedly, Melco 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 Melco Resorts will offset losses from the drop in Melco Resorts' long position.| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
| Melco Resorts vs. Wynn Resorts Limited | Melco Resorts vs. MGM Resorts International | Melco Resorts vs. Caesars Entertainment | Melco 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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