Correlation Between Wynn Macau and SkyCity Entertainment

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

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

Diversification Opportunities for Wynn Macau and SkyCity Entertainment

0.0

Correlation Coefficient

Wynn Macau  SkyCity Entertainment

Pay attention - limited upside

The 3 months correlation between Wynn and SkyCity is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Wynn Macau and SkyCity Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkyCity Entertainment 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 SkyCity Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SkyCity Entertainment has no effect on the direction of Wynn Macau i.e., Wynn Macau and SkyCity Entertainment go up and down completely randomly.

Pair Corralation between Wynn Macau and SkyCity Entertainment

Assuming the 90 days horizon Wynn Macau is expected to generate 1.62 times more return on investment than SkyCity Entertainment. However, Wynn Macau is 1.62 times more volatile than SkyCity Entertainment Group. It trades about 0.02 of its potential returns per unit of risk. SkyCity Entertainment Group is currently generating about 0.0 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	Flat
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Wynn Macau  vs.  SkyCity Entertainment Group

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.

SkyCity Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SkyCity Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SkyCity Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wynn Macau and SkyCity Entertainment

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

The idea behind Wynn Macau and SkyCity Entertainment Group 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.

Check out your portfolio center.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.