Correlation Between Red Rock and Las Vegas
Can any of the company-specific risk be diversified away by investing in both Red Rock and Las Vegas 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 Red Rock and Las Vegas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Rock Resorts and Las Vegas Sands, you can compare the effects of market volatilities on Red Rock and Las Vegas 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 Red Rock with a short position of Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Rock and Las Vegas.
Diversification Opportunities for Red Rock and Las Vegas
Very weak diversification
The 3 months correlation between Red and Las is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Red Rock Resorts and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands and Red Rock 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 Red Rock Resorts are associated (or correlated) with Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Red Rock i.e., Red Rock and Las Vegas go up and down completely randomly.
Pair Corralation between Red Rock and Las Vegas
Considering the 90-day investment horizon Red Rock Resorts is expected to under-perform the Las Vegas. In addition to that, Red Rock is 1.26 times more volatile than Las Vegas Sands. It trades about -0.08 of its total potential returns per unit of risk. Las Vegas Sands is currently generating about -0.08 per unit of volatility. If you would invest 4,989 in Las Vegas Sands on February 21, 2024 and sell it today you would lose (368.00) from holding Las Vegas Sands or give up 7.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Red Rock Resorts vs. Las Vegas Sands
Performance |
Timeline |
Red Rock Resorts |
Las Vegas Sands |
Red Rock and Las Vegas Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Red Rock and Las Vegas
The main advantage of trading using opposite Red Rock and Las Vegas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Rock position performs unexpectedly, Las Vegas 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 Las Vegas will offset losses from the drop in Las Vegas' long position.Red Rock vs. International Game Technology | Red Rock vs. PlayAGS | Red Rock vs. Rush Street Interactive | Red Rock vs. PointsBet Holdings Limited |
Las Vegas vs. International Game Technology | Las Vegas vs. PlayAGS | Las Vegas vs. Rush Street Interactive | Las Vegas vs. PointsBet Holdings Limited |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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