Correlation Between Portillos and Monarch Casino

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

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

Diversification Opportunities for Portillos and Monarch Casino

0.87

Correlation Coefficient

Portillos  Monarch Casino

Very poor diversification

The 3 months correlation between Portillos and Monarch is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Portillos and Monarch Casino Resort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monarch Casino Resort and Portillos 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 Portillos are associated (or correlated) with Monarch Casino. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monarch Casino Resort has no effect on the direction of Portillos i.e., Portillos and Monarch Casino go up and down completely randomly.

Pair Corralation between Portillos and Monarch Casino

Given the investment horizon of 90 days Portillos is expected to generate 2.56 times more return on investment than Monarch Casino. However, Portillos is 2.56 times more volatile than Monarch Casino Resort. It trades about 0.12 of its potential returns per unit of risk. Monarch Casino Resort is currently generating about 0.01 per unit of risk. If you would invest  910.00  in Portillos on December 30, 2024 and sell it today you would earn a total of  280.00  from holding Portillos or generate 30.77% return on investment over 90 days.

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

Portillos  vs.  Monarch Casino Resort

Portillos

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Portillos are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Portillos displayed solid returns over the last few months and may actually be approaching a breakup point.

Monarch Casino Resort

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monarch Casino Resort has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Monarch Casino is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Portillos and Monarch Casino

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

The idea behind Portillos and Monarch Casino Resort 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.