Correlation Between Wynn Macau and Century Casinos

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

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

Diversification Opportunities for Wynn Macau and Century Casinos

-0.25

Correlation Coefficient

Wynn Macau  Century Casinos

Very good diversification

The 3 months correlation between Wynn and Century is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Wynn Macau and Century Casinos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Casinos and Wynn Macau 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 Wynn Macau are associated (or correlated) with Century Casinos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Casinos has no effect on the direction of Wynn Macau i.e., Wynn Macau and Century Casinos go up and down completely randomly.

Pair Corralation between Wynn Macau and Century Casinos

Assuming the 90 days horizon Wynn Macau is expected to generate 0.93 times more return on investment than Century Casinos. However, Wynn Macau is 1.08 times less risky than Century Casinos. It trades about 0.02 of its potential returns per unit of risk. Century Casinos is currently generating about 0.01 per unit of risk. If you would invest  76.00  in Wynn Macau on September 12, 2024 and sell it today you would earn a total of  1.00  from holding Wynn Macau or generate 1.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.63%
Values	Daily Returns

Wynn Macau  vs.  Century Casinos

Wynn Macau

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wynn Macau are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Wynn Macau reported solid returns over the last few months and may actually be approaching a breakup point.

Century Casinos

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Century Casinos are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Century Casinos showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wynn Macau and Century Casinos

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

The idea behind Wynn Macau and Century Casinos 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.