Correlation Between Wynn Macau and Wynn Resorts

Can any of the company-specific risk be diversified away by investing in both Wynn Macau and Wynn 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 Macau and Wynn Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wynn Macau Limited and Wynn Resorts Limited, you can compare the effects of market volatilities on Wynn Macau and Wynn 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 Macau with a short position of Wynn Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wynn Macau and Wynn Resorts.

Diversification Opportunities for Wynn Macau and Wynn Resorts

0.3

Correlation Coefficient

Wynn Macau  Wynn Resorts

Weak diversification

The 3 months correlation between Wynn and Wynn is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Wynn Macau Limited and Wynn Resorts Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Resorts Limited and Wynn Macau 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 Macau Limited are associated (or correlated) with Wynn Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Resorts Limited has no effect on the direction of Wynn Macau i.e., Wynn Macau and Wynn Resorts go up and down completely randomly.

Pair Corralation between Wynn Macau and Wynn Resorts

Assuming the 90 days horizon Wynn Macau Limited is expected to generate 1.3 times more return on investment than Wynn Resorts. However, Wynn Macau is 1.3 times more volatile than Wynn Resorts Limited. It trades about -0.01 of its potential returns per unit of risk. Wynn Resorts Limited is currently generating about -0.05 per unit of risk. If you would invest  68.00  in Wynn Macau Limited on December 20, 2024 and sell it today you would lose (3.00) from holding Wynn Macau Limited or give up 4.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Wynn Macau Limited  vs.  Wynn Resorts Limited

Wynn Macau Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wynn Macau Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Wynn Macau is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Wynn Resorts Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wynn Resorts Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Wynn Macau and Wynn Resorts

The main advantage of trading using opposite Wynn Macau and Wynn Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wynn Macau position performs unexpectedly, Wynn 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 Wynn Resorts will offset losses from the drop in Wynn Resorts' long position.

The idea behind Wynn Macau Limited and Wynn Resorts Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.