Correlation Between Golden Entertainment and Full House

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

By analyzing existing cross correlation between Golden Entertainment and Full House Resorts, you can compare the effects of market volatilities on Golden Entertainment and Full House 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 Full House. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Entertainment and Full House.

Diversification Opportunities for Golden Entertainment and Full House

0.8

Correlation Coefficient

Golden Entertainment  Full House

Very poor diversification

The 3 months correlation between Golden and Full is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Golden Entertainment and Full House Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Full House Resorts 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 Full House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Full House Resorts has no effect on the direction of Golden Entertainment i.e., Golden Entertainment and Full House go up and down completely randomly.

Pair Corralation between Golden Entertainment and Full House

Given the investment horizon of 90 days Golden Entertainment is expected to under-perform the Full House. But the stock apears to be less risky and, when comparing its historical volatility, Golden Entertainment is 1.75 times less risky than Full House. The stock trades about -0.1 of its potential returns per unit of risk. The Full House Resorts is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  393.00  in Full House Resorts on December 27, 2024 and sell it today you would earn a total of  30.00  from holding Full House Resorts or generate 7.63% return on investment over 90 days.

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

Golden Entertainment  vs.  Full House Resorts

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.

Full House Resorts

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Full House Resorts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, Full House may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Golden Entertainment and Full House

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

The idea behind Golden Entertainment and Full House Resorts 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.