Correlation Between Wynn Resorts and Airbnb

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

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

Diversification Opportunities for Wynn Resorts and Airbnb

0.49

Correlation Coefficient

Wynn Resorts  Airbnb

Very weak diversification

The 3 months correlation between Wynn and Airbnb is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Wynn Resorts Limited and Airbnb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbnb Inc and Wynn Resorts 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 Resorts Limited are associated (or correlated) with Airbnb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbnb Inc has no effect on the direction of Wynn Resorts i.e., Wynn Resorts and Airbnb go up and down completely randomly.

Pair Corralation between Wynn Resorts and Airbnb

Given the investment horizon of 90 days Wynn Resorts Limited is expected to generate 0.82 times more return on investment than Airbnb. However, Wynn Resorts Limited is 1.22 times less risky than Airbnb. It trades about 0.02 of its potential returns per unit of risk. Airbnb Inc is currently generating about -0.01 per unit of risk. If you would invest  8,559  in Wynn Resorts Limited on December 28, 2024 and sell it today you would earn a total of  56.00  from holding Wynn Resorts Limited or generate 0.65% return on investment over 90 days.

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

Wynn Resorts Limited  vs.  Airbnb Inc

Wynn Resorts Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wynn Resorts Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Wynn Resorts is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Airbnb Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Airbnb Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Airbnb is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wynn Resorts and Airbnb

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

The idea behind Wynn Resorts Limited and Airbnb Inc 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.