Correlation Between Studio City and Ballys Corp

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

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

Diversification Opportunities for Studio City and Ballys Corp

0.47

Correlation Coefficient

Studio City  Ballys Corp

Very weak diversification

The 3 months correlation between Studio and Ballys is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Studio City International and Ballys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballys Corp and Studio City 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 Studio City 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 Studio City i.e., Studio City and Ballys Corp go up and down completely randomly.

Pair Corralation between Studio City and Ballys Corp

Considering the 90-day investment horizon Studio City International is expected to under-perform the Ballys Corp. But the stock apears to be less risky and, when comparing its historical volatility, Studio City International is 1.21 times less risky than Ballys Corp. The stock trades about -0.08 of its potential returns per unit of risk. The Ballys Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,785  in Ballys Corp on December 28, 2024 and sell it today you would lose (521.00) from holding Ballys Corp or give up 29.19% of portfolio value over 90 days.

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

Studio City International  vs.  Ballys Corp

Studio City International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Studio City International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 inconsistent performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Studio City and Ballys Corp

The main advantage of trading using opposite Studio City and Ballys Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Studio City 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 Studio City 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.