Correlation Between Mercantile Investment and Las Vegas

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

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

Diversification Opportunities for Mercantile Investment and Las Vegas

-0.22

Correlation Coefficient

Mercantile Investment  Las Vegas

Very good diversification

The 3 months correlation between Mercantile and Las is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding The Mercantile Investment 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 Mercantile Investment 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 The Mercantile Investment 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 Mercantile Investment i.e., Mercantile Investment and Las Vegas go up and down completely randomly.

Pair Corralation between Mercantile Investment and Las Vegas

Assuming the 90 days trading horizon The Mercantile Investment is expected to under-perform the Las Vegas. But the stock apears to be less risky and, when comparing its historical volatility, The Mercantile Investment is 1.95 times less risky than Las Vegas. The stock trades about -0.07 of its potential returns per unit of risk. The Las Vegas Sands is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4,240  in Las Vegas Sands on September 19, 2024 and sell it today you would earn a total of  1,128  from holding Las Vegas Sands or generate 26.6% return on investment over 90 days.

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

The Mercantile Investment  vs.  Las Vegas Sands

The Mercantile Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Las Vegas Sands

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Las Vegas Sands are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Las Vegas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mercantile Investment and Las Vegas

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

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.