Correlation Between Carriage Services and Wynn Resorts

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

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

Diversification Opportunities for Carriage Services and Wynn Resorts

-0.49

Correlation Coefficient

Carriage Services  Wynn Resorts

Very good diversification

The 3 months correlation between Carriage and Wynn is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Carriage Services 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 Carriage Services 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 Carriage Services 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 Carriage Services i.e., Carriage Services and Wynn Resorts go up and down completely randomly.

Pair Corralation between Carriage Services and Wynn Resorts

Considering the 90-day investment horizon Carriage Services is expected to generate 1.19 times more return on investment than Wynn Resorts. However, Carriage Services is 1.19 times more volatile than Wynn Resorts Limited. It trades about 0.04 of its potential returns per unit of risk. Wynn Resorts Limited is currently generating about 0.02 per unit of risk. If you would invest  2,767  in Carriage Services on September 22, 2024 and sell it today you would earn a total of  1,281  from holding Carriage Services or generate 46.3% return on investment over 90 days.

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

Carriage Services  vs.  Wynn Resorts Limited

Carriage Services

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carriage Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Carriage Services showed solid returns over the last few months and may actually be approaching a breakup point.

Wynn Resorts Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wynn Resorts Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Wynn Resorts displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carriage Services and Wynn Resorts

The main advantage of trading using opposite Carriage Services and Wynn Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carriage Services 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 Carriage Services 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.