Correlation Between Wynn Resorts and Melco Resorts
Can any of the company-specific risk be diversified away by investing in both Wynn Resorts 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 Wynn Resorts and Melco Resorts 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 Melco Resorts Entertainment, you can compare the effects of market volatilities on Wynn Resorts 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 Wynn Resorts with a short position of Melco Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wynn Resorts and Melco Resorts.
Diversification Opportunities for Wynn Resorts and Melco Resorts
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wynn and Melco is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Wynn Resorts Limited 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 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 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 Wynn Resorts i.e., Wynn Resorts and Melco Resorts go up and down completely randomly.
Pair Corralation between Wynn Resorts and Melco Resorts
Given the investment horizon of 90 days Wynn Resorts Limited is expected to generate 1.33 times more return on investment than Melco Resorts. However, Wynn Resorts is 1.33 times more volatile than Melco Resorts Entertainment. It trades about -0.1 of its potential returns per unit of risk. Melco Resorts Entertainment is currently generating about -0.31 per unit of risk. If you would invest 9,836 in Wynn Resorts Limited on August 27, 2024 and sell it today you would lose (707.00) from holding Wynn Resorts Limited or give up 7.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wynn Resorts Limited vs. Melco Resorts Entertainment
Performance |
| Timeline |
| Wynn Resorts Limited |
| Melco Resorts Entert |
Wynn Resorts and Melco Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wynn Resorts and Melco Resorts
The main advantage of trading using opposite Wynn Resorts and Melco Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wynn Resorts 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.| Wynn Resorts vs. MGM Resorts International | Wynn Resorts vs. Caesars Entertainment | Wynn Resorts vs. Melco Resorts Entertainment | Wynn Resorts vs. Penn National Gaming |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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