Correlation Between Full House and Monarch Casino

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

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

Diversification Opportunities for Full House and Monarch Casino

0.5

Correlation Coefficient

Full House  Monarch Casino

Very weak diversification

The 3 months correlation between Full and Monarch is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Full House Resorts 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 Full House 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 Full House Resorts 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 Full House i.e., Full House and Monarch Casino go up and down completely randomly.

Pair Corralation between Full House and Monarch Casino

Considering the 90-day investment horizon Full House Resorts is expected to generate 2.2 times more return on investment than Monarch Casino. However, Full House is 2.2 times more volatile than Monarch Casino Resort. It trades about 0.01 of its potential returns per unit of risk. Monarch Casino Resort is currently generating about 0.02 per unit of risk. If you would invest  535.00  in Full House Resorts on January 31, 2024 and sell it today you would lose (1.00) from holding Full House Resorts or give up 0.19% of portfolio value over 90 days.

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

Full House Resorts  vs.  Monarch Casino Resort

Full House Resorts

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Full House Resorts are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, Full House disclosed solid returns over the last few months and may actually be approaching a breakup point.

Monarch Casino Resort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monarch Casino Resort has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Monarch Casino is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Full House and Monarch Casino

The main advantage of trading using opposite Full House and Monarch Casino positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Full House 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 Full House Resorts 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.