Correlation Between MGM Resorts and Hilton Grand

Can any of the company-specific risk be diversified away by investing in both MGM Resorts and Hilton Grand 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 Hilton Grand 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 Hilton Grand Vacations, you can compare the effects of market volatilities on MGM Resorts and Hilton Grand 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 Hilton Grand. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGM Resorts and Hilton Grand.

Diversification Opportunities for MGM Resorts and Hilton Grand

-0.42

Correlation Coefficient

MGM Resorts  Hilton Grand

Very good diversification

The 3 months correlation between MGM and Hilton is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding MGM Resorts International and Hilton Grand Vacations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Grand Vacations 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 Hilton Grand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Grand Vacations has no effect on the direction of MGM Resorts i.e., MGM Resorts and Hilton Grand go up and down completely randomly.

Pair Corralation between MGM Resorts and Hilton Grand

Considering the 90-day investment horizon MGM Resorts International is expected to under-perform the Hilton Grand. But the stock apears to be less risky and, when comparing its historical volatility, MGM Resorts International is 1.03 times less risky than Hilton Grand. The stock trades about -0.09 of its potential returns per unit of risk. The Hilton Grand Vacations is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,548  in Hilton Grand Vacations on October 3, 2024 and sell it today you would earn a total of  347.00  from holding Hilton Grand Vacations or generate 9.78% return on investment over 90 days.

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

MGM Resorts International  vs.  Hilton Grand Vacations

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 latest unfluctuating 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.

Hilton Grand Vacations

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Grand Vacations are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Hilton Grand may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MGM Resorts and Hilton Grand

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

The idea behind MGM Resorts International and Hilton Grand Vacations 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.