Correlation Between Monarch Casino and Studio City

Can any of the company-specific risk be diversified away by investing in both Monarch Casino and Studio City 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 Studio City 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 Studio City International, you can compare the effects of market volatilities on Monarch Casino and Studio City 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 Studio City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monarch Casino and Studio City.

Diversification Opportunities for Monarch Casino and Studio City

0.14

Correlation Coefficient

Monarch Casino  Studio City

Average diversification

The 3 months correlation between Monarch and Studio is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Monarch Casino Resort and Studio City International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Studio City International 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 Studio City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Studio City International has no effect on the direction of Monarch Casino i.e., Monarch Casino and Studio City go up and down completely randomly.

Pair Corralation between Monarch Casino and Studio City

Given the investment horizon of 90 days Monarch Casino is expected to generate 4.68 times less return on investment than Studio City. But when comparing it to its historical volatility, Monarch Casino Resort is 3.53 times less risky than Studio City. It trades about 0.02 of its potential returns per unit of risk. Studio City International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  552.00  in Studio City International on August 31, 2024 and sell it today you would earn a total of  97.00  from holding Studio City International or generate 17.57% return on investment over 90 days.

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

Monarch Casino Resort  vs.  Studio City International

Monarch Casino Resort

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monarch Casino Resort are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Monarch Casino may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Studio City International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Studio City International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Studio City exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monarch Casino and Studio City

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

The idea behind Monarch Casino Resort and Studio City International 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.