Correlation Between MGM Resorts and Ballys Corp

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

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

Diversification Opportunities for MGM Resorts and Ballys Corp

0.09

Correlation Coefficient

MGM Resorts  Ballys Corp

Significant diversification

The 3 months correlation between MGM and Ballys is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding MGM Resorts International and Ballys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballys Corp and MGM Resorts 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 MGM Resorts International 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 MGM Resorts i.e., MGM Resorts and Ballys Corp go up and down completely randomly.

Pair Corralation between MGM Resorts and Ballys Corp

Considering the 90-day investment horizon MGM Resorts is expected to generate 3.46 times less return on investment than Ballys Corp. In addition to that, MGM Resorts is 7.59 times more volatile than Ballys Corp. It trades about 0.01 of its total potential returns per unit of risk. Ballys Corp is currently generating about 0.18 per unit of volatility. If you would invest  1,720  in Ballys Corp on August 30, 2024 and sell it today you would earn a total of  56.00  from holding Ballys Corp or generate 3.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

MGM Resorts International  vs.  Ballys Corp

MGM Resorts International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MGM Resorts International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, MGM Resorts is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ballys Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ballys Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Ballys Corp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MGM Resorts and Ballys Corp

The main advantage of trading using opposite MGM Resorts and Ballys Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGM Resorts 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 MGM Resorts International 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.