Correlation Between Red Rock and Arm Holdings
Can any of the company-specific risk be diversified away by investing in both Red Rock and Arm Holdings 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 Red Rock and Arm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Rock Resorts and Arm Holdings plc, you can compare the effects of market volatilities on Red Rock and Arm Holdings 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 Red Rock with a short position of Arm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Rock and Arm Holdings.
Diversification Opportunities for Red Rock and Arm Holdings
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Red and Arm is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Red Rock Resorts and Arm Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arm Holdings plc and Red Rock 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 Red Rock Resorts are associated (or correlated) with Arm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arm Holdings plc has no effect on the direction of Red Rock i.e., Red Rock and Arm Holdings go up and down completely randomly.
Pair Corralation between Red Rock and Arm Holdings
Considering the 90-day investment horizon Red Rock Resorts is expected to generate 0.74 times more return on investment than Arm Holdings. However, Red Rock Resorts is 1.36 times less risky than Arm Holdings. It trades about 0.22 of its potential returns per unit of risk. Arm Holdings plc is currently generating about 0.08 per unit of risk. If you would invest 4,782 in Red Rock Resorts on May 30, 2025 and sell it today you would earn a total of 1,475 from holding Red Rock Resorts or generate 30.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Rock Resorts vs. Arm Holdings plc
Performance |
| Timeline |
| Red Rock Resorts |
| Arm Holdings plc |
Red Rock and Arm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Rock and Arm Holdings
The main advantage of trading using opposite Red Rock and Arm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Rock position performs unexpectedly, Arm Holdings 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 Arm Holdings will offset losses from the drop in Arm Holdings' long position.| Red Rock vs. Costco Wholesale Corp | Red Rock vs. Walt Disney | Red Rock vs. Nike Inc | Red Rock vs. Visa Class A |
| Arm Holdings vs. SolarEdge Technologies | Arm Holdings vs. First Solar | Arm Holdings vs. Sunrun Inc | Arm Holdings vs. Canadian Solar |
Check out your portfolio center.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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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