Correlation Between Monarch Casino and Ballys Corp

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

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

Diversification Opportunities for Monarch Casino and Ballys Corp

0.72

Correlation Coefficient

Monarch Casino  Ballys Corp

Poor diversification

The 3 months correlation between Monarch and Ballys is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Monarch Casino Resort and Ballys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballys Corp and Monarch Casino 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 Monarch Casino Resort are associated (or correlated) with Ballys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ballys Corp has no effect on the direction of Monarch Casino i.e., Monarch Casino and Ballys Corp go up and down completely randomly.

Pair Corralation between Monarch Casino and Ballys Corp

Given the investment horizon of 90 days Monarch Casino is expected to generate 1.16 times less return on investment than Ballys Corp. But when comparing it to its historical volatility, Monarch Casino Resort is 2.3 times less risky than Ballys Corp. It trades about 0.02 of its potential returns per unit of risk. Ballys Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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 Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Monarch Casino Resort  vs.  Ballys Corp

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.

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.

Pair Trading with Monarch Casino and Ballys Corp

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

The idea behind Monarch Casino Resort and Ballys Corp 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.