Correlation Between Monarch Casino and Flanigans Enterprises

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

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

Diversification Opportunities for Monarch Casino and Flanigans Enterprises

-0.66

Correlation Coefficient

Monarch Casino  Flanigans Enterprises

Excellent diversification

The 3 months correlation between Monarch and Flanigans is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Monarch Casino Resort and Flanigans Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flanigans Enterprises and Monarch Casino 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 Monarch Casino Resort are associated (or correlated) with Flanigans Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flanigans Enterprises has no effect on the direction of Monarch Casino i.e., Monarch Casino and Flanigans Enterprises go up and down completely randomly.

Pair Corralation between Monarch Casino and Flanigans Enterprises

Given the investment horizon of 90 days Monarch Casino is expected to generate 33.61 times less return on investment than Flanigans Enterprises. But when comparing it to its historical volatility, Monarch Casino Resort is 45.67 times less risky than Flanigans Enterprises. It trades about 0.08 of its potential returns per unit of risk. Flanigans Enterprises is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,493  in Flanigans Enterprises on September 13, 2024 and sell it today you would lose (27.00) from holding Flanigans Enterprises or give up 1.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.15%
Values	Daily Returns

Monarch Casino Resort  vs.  Flanigans Enterprises

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.

Flanigans Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flanigans Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Flanigans Enterprises is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Monarch Casino and Flanigans Enterprises

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

The idea behind Monarch Casino Resort and Flanigans Enterprises 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.