Correlation Between Ballys Corp and MGM Resorts

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

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

Diversification Opportunities for Ballys Corp and MGM Resorts

-0.61

Correlation Coefficient

Ballys Corp  MGM Resorts

Excellent diversification

The 3 months correlation between Ballys and MGM is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ballys Corp and MGM Resorts International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGM Resorts International and Ballys Corp 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 Ballys Corp are associated (or correlated) with MGM Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGM Resorts International has no effect on the direction of Ballys Corp i.e., Ballys Corp and MGM Resorts go up and down completely randomly.

Pair Corralation between Ballys Corp and MGM Resorts

Given the investment horizon of 90 days Ballys Corp is expected to generate 1.64 times more return on investment than MGM Resorts. However, Ballys Corp is 1.64 times more volatile than MGM Resorts International. It trades about 0.01 of its potential returns per unit of risk. MGM Resorts International is currently generating about 0.0 per unit of risk. If you would invest  1,972  in Ballys Corp on September 30, 2024 and sell it today you would lose (189.00) from holding Ballys Corp or give up 9.58% of portfolio value over 90 days.

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

Ballys Corp  vs.  MGM Resorts International

Ballys Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ballys Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Ballys Corp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

MGM Resorts International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MGM Resorts International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Ballys Corp and MGM Resorts

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

The idea behind Ballys Corp and MGM Resorts International 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.