Correlation Between Wynn Resorts and Cleveland Cliffs
Can any of the company-specific risk be diversified away by investing in both Wynn Resorts and Cleveland Cliffs 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 Wynn Resorts and Cleveland Cliffs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wynn Resorts Limited and Cleveland Cliffs, you can compare the effects of market volatilities on Wynn Resorts and Cleveland Cliffs 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 Wynn Resorts with a short position of Cleveland Cliffs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wynn Resorts and Cleveland Cliffs.
Diversification Opportunities for Wynn Resorts and Cleveland Cliffs
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wynn and Cleveland is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Wynn Resorts Limited and Cleveland Cliffs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleveland Cliffs and Wynn Resorts 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 Wynn Resorts Limited are associated (or correlated) with Cleveland Cliffs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleveland Cliffs has no effect on the direction of Wynn Resorts i.e., Wynn Resorts and Cleveland Cliffs go up and down completely randomly.
Pair Corralation between Wynn Resorts and Cleveland Cliffs
Assuming the 90 days trading horizon Wynn Resorts is expected to generate 1.72 times less return on investment than Cleveland Cliffs. But when comparing it to its historical volatility, Wynn Resorts Limited is 1.37 times less risky than Cleveland Cliffs. It trades about 0.01 of its potential returns per unit of risk. Cleveland Cliffs is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 26,914 in Cleveland Cliffs on August 31, 2024 and sell it today you would lose (1,803) from holding Cleveland Cliffs or give up 6.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wynn Resorts Limited vs. Cleveland Cliffs
Performance |
| Timeline |
| Wynn Resorts Limited |
| Cleveland Cliffs |
Wynn Resorts and Cleveland Cliffs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wynn Resorts and Cleveland Cliffs
The main advantage of trading using opposite Wynn Resorts and Cleveland Cliffs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wynn Resorts position performs unexpectedly, Cleveland Cliffs 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 Cleveland Cliffs will offset losses from the drop in Cleveland Cliffs' long position.| Wynn Resorts vs. Verizon Communications | Wynn Resorts vs. Southwest Airlines | Wynn Resorts vs. McEwen Mining | Wynn Resorts vs. First Majestic Silver |
| Cleveland Cliffs vs. BHP Group | Cleveland Cliffs vs. Rio Tinto Group | Cleveland Cliffs vs. Vale SA | Cleveland Cliffs vs. Glencore plc |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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