Correlation Between Good Times and Monarch Casino

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

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

Diversification Opportunities for Good Times and Monarch Casino

-0.65

Correlation Coefficient

Good Times  Monarch Casino

Excellent diversification

The 3 months correlation between Good and Monarch is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Good Times Restaurants 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 Good Times 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 Good Times Restaurants 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 Good Times i.e., Good Times and Monarch Casino go up and down completely randomly.

Pair Corralation between Good Times and Monarch Casino

Given the investment horizon of 90 days Good Times Restaurants is expected to under-perform the Monarch Casino. In addition to that, Good Times is 1.92 times more volatile than Monarch Casino Resort. It trades about -0.01 of its total potential returns per unit of risk. Monarch Casino Resort is currently generating about 0.05 per unit of volatility. If you would invest  6,902  in Monarch Casino Resort on September 13, 2024 and sell it today you would earn a total of  1,800  from holding Monarch Casino Resort or generate 26.08% return on investment over 90 days.

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

Good Times Restaurants  vs.  Monarch Casino Resort

Good Times Restaurants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Good Times Restaurants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 Good Times and Monarch Casino

The main advantage of trading using opposite Good Times and Monarch Casino positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Good Times 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 Good Times Restaurants 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.