Correlation Between Vail Resorts and Studio City

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

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

Diversification Opportunities for Vail Resorts and Studio City

0.08

Correlation Coefficient

Vail Resorts  Studio City

Significant diversification

The 3 months correlation between Vail and Studio is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Vail Resorts and Studio City International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Studio City International and Vail 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 Vail Resorts are associated (or correlated) with Studio City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Studio City International has no effect on the direction of Vail Resorts i.e., Vail Resorts and Studio City go up and down completely randomly.

Pair Corralation between Vail Resorts and Studio City

Considering the 90-day investment horizon Vail Resorts is expected to under-perform the Studio City. But the stock apears to be less risky and, when comparing its historical volatility, Vail Resorts is 4.67 times less risky than Studio City. The stock trades about -0.39 of its potential returns per unit of risk. The Studio City International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  697.00  in Studio City International on February 1, 2024 and sell it today you would earn a total of  47.00  from holding Studio City International or generate 6.74% return on investment over 90 days.

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

Vail Resorts  vs.  Studio City International

Vail Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vail Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Studio City International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Studio City International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Studio City exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vail Resorts and Studio City

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

The idea behind Vail Resorts and Studio City 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.