Correlation Between Golden Entertainment and Ballys Corp

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

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

Diversification Opportunities for Golden Entertainment and Ballys Corp

-0.09

Correlation Coefficient

Golden Entertainment  Ballys Corp

Good diversification

The 3 months correlation between Golden and Ballys is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Golden Entertainment and Ballys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballys Corp and Golden Entertainment 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 Golden Entertainment are associated (or correlated) with Ballys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ballys Corp has no effect on the direction of Golden Entertainment i.e., Golden Entertainment and Ballys Corp go up and down completely randomly.

Pair Corralation between Golden Entertainment and Ballys Corp

Given the investment horizon of 90 days Golden Entertainment is expected to generate 0.51 times more return on investment than Ballys Corp. However, Golden Entertainment is 1.97 times less risky than Ballys Corp. It trades about -0.1 of its potential returns per unit of risk. Ballys Corp is currently generating about -0.07 per unit of risk. If you would invest  3,347  in Golden Entertainment on November 28, 2024 and sell it today you would lose (294.00) from holding Golden Entertainment or give up 8.78% of portfolio value over 90 days.

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

Golden Entertainment  vs.  Ballys Corp

Golden Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Ballys Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ballys Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Golden Entertainment and Ballys Corp

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

The idea behind Golden Entertainment and Ballys Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.