Correlation Between Monarch Casino and SkyCity Entertainment

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

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

Diversification Opportunities for Monarch Casino and SkyCity Entertainment

0.09

Correlation Coefficient

Monarch Casino  SkyCity Entertainment

Significant diversification

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

Pair Corralation between Monarch Casino and SkyCity Entertainment

Given the investment horizon of 90 days Monarch Casino Resort is expected to generate 0.7 times more return on investment than SkyCity Entertainment. However, Monarch Casino Resort is 1.44 times less risky than SkyCity Entertainment. It trades about 0.15 of its potential returns per unit of risk. SkyCity Entertainment Group is currently generating about -0.13 per unit of risk. If you would invest  7,357  in Monarch Casino Resort on October 20, 2024 and sell it today you would earn a total of  1,048  from holding Monarch Casino Resort or generate 14.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Monarch Casino Resort  vs.  SkyCity Entertainment Group

Monarch Casino Resort

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monarch Casino Resort are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Monarch Casino demonstrated solid returns over the last few months and may actually be approaching a breakup point.

SkyCity Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SkyCity Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Monarch Casino and SkyCity Entertainment

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

The idea behind Monarch Casino Resort and SkyCity Entertainment Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.