Correlation Between Grupo Sports and MGM Resorts
Can any of the company-specific risk be diversified away by investing in both Grupo Sports 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 Grupo Sports and MGM Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Sports World and MGM Resorts International, you can compare the effects of market volatilities on Grupo Sports 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 Grupo Sports with a short position of MGM Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Sports and MGM Resorts.
Diversification Opportunities for Grupo Sports and MGM Resorts
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grupo and MGM is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Sports World 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 Grupo Sports 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 Grupo Sports World 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 Grupo Sports i.e., Grupo Sports and MGM Resorts go up and down completely randomly.
Pair Corralation between Grupo Sports and MGM Resorts
Assuming the 90 days trading horizon Grupo Sports is expected to generate 2.39 times less return on investment than MGM Resorts. But when comparing it to its historical volatility, Grupo Sports World is 1.51 times less risky than MGM Resorts. It trades about 0.06 of its potential returns per unit of risk. MGM Resorts International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 75,000 in MGM Resorts International on September 4, 2024 and sell it today you would earn a total of 2,900 from holding MGM Resorts International or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Sports World vs. MGM Resorts International
Performance |
| Timeline |
| Grupo Sports World |
| MGM Resorts International |
Grupo Sports and MGM Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Sports and MGM Resorts
The main advantage of trading using opposite Grupo Sports and MGM Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Sports 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.| Grupo Sports vs. McEwen Mining | Grupo Sports vs. Costco Wholesale | Grupo Sports vs. Hoteles City Express | Grupo Sports vs. GMxico Transportes SAB |
| MGM Resorts vs. DXC Technology | MGM Resorts vs. Lloyds Banking Group | MGM Resorts vs. Verizon Communications | MGM Resorts vs. Taiwan Semiconductor Manufacturing |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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