Correlation Between Wynn Resorts and Selina Hospitality

Can any of the company-specific risk be diversified away by investing in both Wynn Resorts and Selina Hospitality 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 Selina Hospitality 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 Selina Hospitality PLC, you can compare the effects of market volatilities on Wynn Resorts and Selina Hospitality 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 Selina Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wynn Resorts and Selina Hospitality.

Diversification Opportunities for Wynn Resorts and Selina Hospitality

0.28

Correlation Coefficient

Wynn Resorts  Selina Hospitality

Modest diversification

The 3 months correlation between Wynn and Selina is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Wynn Resorts Limited and Selina Hospitality PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selina Hospitality PLC 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 Selina Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selina Hospitality PLC has no effect on the direction of Wynn Resorts i.e., Wynn Resorts and Selina Hospitality go up and down completely randomly.

Pair Corralation between Wynn Resorts and Selina Hospitality

Given the investment horizon of 90 days Wynn Resorts Limited is expected to under-perform the Selina Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, Wynn Resorts Limited is 11.21 times less risky than Selina Hospitality. The stock trades about -0.2 of its potential returns per unit of risk. The Selina Hospitality PLC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Selina Hospitality PLC on February 7, 2024 and sell it today you would earn a total of  0.62  from holding Selina Hospitality PLC or generate 15.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Wynn Resorts Limited  vs.  Selina Hospitality PLC

Wynn Resorts Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wynn Resorts Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Wynn Resorts is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Selina Hospitality PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Selina Hospitality PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Wynn Resorts and Selina Hospitality

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

The idea behind Wynn Resorts Limited and Selina Hospitality PLC 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..