Correlation Between Wynn Macau and Monarch Casino

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

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

Diversification Opportunities for Wynn Macau and Monarch Casino

-0.23

Correlation Coefficient

Wynn Macau  Monarch Casino

Very good diversification

The 3 months correlation between Wynn and Monarch is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Wynn Macau 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 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 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 Wynn Macau i.e., Wynn Macau and Monarch Casino go up and down completely randomly.

Pair Corralation between Wynn Macau and Monarch Casino

Assuming the 90 days horizon Wynn Macau is expected to generate 1.05 times less return on investment than Monarch Casino. In addition to that, Wynn Macau is 2.43 times more volatile than Monarch Casino Resort. It trades about 0.07 of its total potential returns per unit of risk. Monarch Casino Resort is currently generating about 0.18 per unit of volatility. If you would invest  7,471  in Monarch Casino Resort on September 14, 2024 and sell it today you would earn a total of  1,253  from holding Monarch Casino Resort or generate 16.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Wynn Macau  vs.  Monarch Casino Resort

Wynn Macau

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wynn Macau are ranked lower than 5 (%) 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.

Monarch Casino Resort

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monarch Casino Resort are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Monarch Casino demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wynn Macau and Monarch Casino

The main advantage of trading using opposite Wynn Macau and Monarch Casino positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wynn Macau 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 Wynn Macau 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.