Correlation Between Auburn National and Monarch Casino

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

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

Diversification Opportunities for Auburn National and Monarch Casino

0.76

Correlation Coefficient

Auburn National  Monarch Casino

Poor diversification

The 3 months correlation between Auburn and Monarch is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Auburn National Bancorp. and Monarch Casino Resort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monarch Casino Resort and Auburn National 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 Auburn National Bancorporation are associated (or correlated) with Monarch Casino. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monarch Casino Resort has no effect on the direction of Auburn National i.e., Auburn National and Monarch Casino go up and down completely randomly.

Pair Corralation between Auburn National and Monarch Casino

Given the investment horizon of 90 days Auburn National Bancorporation is expected to generate 1.83 times more return on investment than Monarch Casino. However, Auburn National is 1.83 times more volatile than Monarch Casino Resort. It trades about 0.12 of its potential returns per unit of risk. Monarch Casino Resort is currently generating about 0.18 per unit of risk. If you would invest  1,957  in Auburn National Bancorporation on September 13, 2024 and sell it today you would earn a total of  378.00  from holding Auburn National Bancorporation or generate 19.32% return on investment over 90 days.

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

Auburn National Bancorp.  vs.  Monarch Casino Resort

Auburn National Banc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Auburn National Bancorporation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, Auburn National displayed solid returns over the last few months and may actually be approaching a breakup point.

Monarch Casino Resort

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monarch Casino Resort are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Monarch Casino demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Auburn National and Monarch Casino

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

The idea behind Auburn National Bancorporation and Monarch Casino Resort 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.