Correlation Between Wynn Resorts and New Oriental
Can any of the company-specific risk be diversified away by investing in both Wynn Resorts and New Oriental 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 New Oriental 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 New Oriental Education, you can compare the effects of market volatilities on Wynn Resorts and New Oriental 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 New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wynn Resorts and New Oriental.
Diversification Opportunities for Wynn Resorts and New Oriental
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wynn and New is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Wynn Resorts Limited and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education 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 New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of Wynn Resorts i.e., Wynn Resorts and New Oriental go up and down completely randomly.
Pair Corralation between Wynn Resorts and New Oriental
Assuming the 90 days trading horizon Wynn Resorts Limited is expected to generate 0.92 times more return on investment than New Oriental. However, Wynn Resorts Limited is 1.09 times less risky than New Oriental. It trades about 0.06 of its potential returns per unit of risk. New Oriental Education is currently generating about 0.01 per unit of risk. If you would invest 151,941 in Wynn Resorts Limited on September 12, 2024 and sell it today you would earn a total of 42,689 from holding Wynn Resorts Limited or generate 28.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wynn Resorts Limited vs. New Oriental Education
Performance |
| Timeline |
| Wynn Resorts Limited |
| New Oriental Education |
Wynn Resorts and New Oriental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wynn Resorts and New Oriental
The main advantage of trading using opposite Wynn Resorts and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wynn Resorts position performs unexpectedly, New Oriental 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 New Oriental will offset losses from the drop in New Oriental's long position.| Wynn Resorts vs. DXC Technology | Wynn Resorts vs. Verizon Communications | Wynn Resorts vs. Micron Technology | Wynn Resorts vs. First Republic Bank |
| New Oriental vs. Grupo Carso SAB | New Oriental vs. Monster Beverage Corp | New Oriental vs. Prudential Financial | New Oriental 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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