Correlation Between Wynn Resorts and Carnival Plc
Can any of the company-specific risk be diversified away by investing in both Wynn Resorts and Carnival Plc 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 Carnival Plc 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 Carnival Plc ADS, you can compare the effects of market volatilities on Wynn Resorts and Carnival Plc 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 Carnival Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wynn Resorts and Carnival Plc.
Diversification Opportunities for Wynn Resorts and Carnival Plc
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wynn and Carnival is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Wynn Resorts Limited and Carnival Plc ADS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival Plc ADS 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 Carnival Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival Plc ADS has no effect on the direction of Wynn Resorts i.e., Wynn Resorts and Carnival Plc go up and down completely randomly.
Pair Corralation between Wynn Resorts and Carnival Plc
Given the investment horizon of 90 days Wynn Resorts Limited is expected to under-perform the Carnival Plc. But the stock apears to be less risky and, when comparing its historical volatility, Wynn Resorts Limited is 1.46 times less risky than Carnival Plc. The stock trades about -0.33 of its potential returns per unit of risk. The Carnival Plc ADS is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 1,462 in Carnival Plc ADS on January 30, 2024 and sell it today you would lose (102.00) from holding Carnival Plc ADS or give up 6.98% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Wynn Resorts Limited vs. Carnival Plc ADS
Performance |
Timeline |
Wynn Resorts Limited |
Carnival Plc ADS |
Wynn Resorts and Carnival Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wynn Resorts and Carnival Plc
The main advantage of trading using opposite Wynn Resorts and Carnival Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wynn Resorts position performs unexpectedly, Carnival Plc 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 Carnival Plc will offset losses from the drop in Carnival Plc's long position.Wynn Resorts vs. MGM Resorts International | Wynn Resorts vs. Caesars Entertainment | Wynn Resorts vs. Melco Resorts Entertainment | Wynn Resorts vs. Penn National Gaming |
Carnival Plc vs. Escalade Incorporated | Carnival Plc vs. JAKKS Pacific | Carnival Plc vs. Clarus Corp | Carnival Plc vs. Cedar Fair LP |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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