Correlation Between Wynn Macau and Full House

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

By analyzing existing cross correlation between Wynn Macau and Full House Resorts, you can compare the effects of market volatilities on Wynn Macau and Full House 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 Full House. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wynn Macau and Full House.

Diversification Opportunities for Wynn Macau and Full House

-0.33

Correlation Coefficient

Wynn Macau  Full House

Very good diversification

The 3 months correlation between Wynn and Full is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Wynn Macau and Full House Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Full House Resorts 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 Full House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Full House Resorts has no effect on the direction of Wynn Macau i.e., Wynn Macau and Full House go up and down completely randomly.

Pair Corralation between Wynn Macau and Full House

Assuming the 90 days horizon Wynn Macau is expected to generate 2.87 times more return on investment than Full House. However, Wynn Macau is 2.87 times more volatile than Full House Resorts. It trades about -0.01 of its potential returns per unit of risk. Full House Resorts is currently generating about -0.31 per unit of risk. If you would invest  73.00  in Wynn Macau on December 4, 2024 and sell it today you would lose (3.00) from holding Wynn Macau or give up 4.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Wynn Macau  vs.  Full House Resorts

Wynn Macau

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wynn Macau are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Wynn Macau is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Full House Resorts

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Full House Resorts are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Full House is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Wynn Macau and Full House

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

The idea behind Wynn Macau and Full House Resorts 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.