Correlation Between Hilton Worldwide and Monarch Casino

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

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

Diversification Opportunities for Hilton Worldwide and Monarch Casino

0.77

Correlation Coefficient

Hilton Worldwide  Monarch Casino

Poor diversification

The 3 months correlation between Hilton and Monarch is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings 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 Hilton Worldwide 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 Hilton Worldwide Holdings 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 Hilton Worldwide i.e., Hilton Worldwide and Monarch Casino go up and down completely randomly.

Pair Corralation between Hilton Worldwide and Monarch Casino

Considering the 90-day investment horizon Hilton Worldwide Holdings is expected to generate 0.97 times more return on investment than Monarch Casino. However, Hilton Worldwide Holdings is 1.03 times less risky than Monarch Casino. It trades about -0.17 of its potential returns per unit of risk. Monarch Casino Resort is currently generating about -0.28 per unit of risk. If you would invest  21,270  in Hilton Worldwide Holdings on January 30, 2024 and sell it today you would lose (1,058) from holding Hilton Worldwide Holdings or give up 4.97% of portfolio value over 90 days.

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

Hilton Worldwide Holdings  vs.  Monarch Casino Resort

Hilton Worldwide Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Worldwide Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Hilton Worldwide is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Monarch Casino Resort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monarch Casino Resort has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Monarch Casino is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Hilton Worldwide and Monarch Casino

The main advantage of trading using opposite Hilton Worldwide and Monarch Casino positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Worldwide 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 Hilton Worldwide Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.