Correlation Between Studio City and Las Vegas

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

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

Diversification Opportunities for Studio City and Las Vegas

0.68

Correlation Coefficient

Studio City  Las Vegas

Poor diversification

The 3 months correlation between Studio and Las is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Studio City International 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 Studio City 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 Studio City International 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 Studio City i.e., Studio City and Las Vegas go up and down completely randomly.

Pair Corralation between Studio City and Las Vegas

Considering the 90-day investment horizon Studio City International is expected to generate 3.0 times more return on investment than Las Vegas. However, Studio City is 3.0 times more volatile than Las Vegas Sands. It trades about 0.07 of its potential returns per unit of risk. Las Vegas Sands is currently generating about 0.05 per unit of risk. If you would invest  215.00  in Studio City International on July 19, 2024 and sell it today you would earn a total of  428.00  from holding Studio City International or generate 199.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Studio City International  vs.  Las Vegas Sands

Studio City International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Studio City International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Studio City is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Las Vegas Sands

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Las Vegas Sands are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Las Vegas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Studio City and Las Vegas

The main advantage of trading using opposite Studio City and Las Vegas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Studio City 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.

The idea behind Studio City International and Las Vegas Sands 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.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.