Correlation Between Red Rock and Table Trac

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

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

Diversification Opportunities for Red Rock and Table Trac

0.75

Correlation Coefficient

Red Rock  Table Trac

Poor diversification

The 3 months correlation between Red and Table is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Red Rock Resorts and Table Trac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Table Trac and Red Rock 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 Red Rock Resorts are associated (or correlated) with Table Trac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Table Trac has no effect on the direction of Red Rock i.e., Red Rock and Table Trac go up and down completely randomly.

Pair Corralation between Red Rock and Table Trac

Considering the 90-day investment horizon Red Rock Resorts is expected to under-perform the Table Trac. But the stock apears to be less risky and, when comparing its historical volatility, Red Rock Resorts is 1.91 times less risky than Table Trac. The stock trades about -0.02 of its potential returns per unit of risk. The Table Trac is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  363.00  in Table Trac on December 26, 2024 and sell it today you would earn a total of  62.00  from holding Table Trac or generate 17.08% return on investment over 90 days.

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

Red Rock Resorts  vs.  Table Trac

Red Rock Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Red Rock Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Red Rock is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Table Trac

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Table Trac are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Table Trac exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Red Rock and Table Trac

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

The idea behind Red Rock Resorts and Table Trac 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..