25.63 -0.19 (-0.74%) Buy

Waiting to invest in MGM? Look for alternatives because it trailed the broader market

13 min read

MGM was among the worst performers today. On a longer term basis, investors in MGM RESORTS INTERNATIONAL made -0.04% per day. Tuesday's performance of -0.74% was a underperformance compared to it's daily average.

[Themes containing MGM]

MGM showed a bearish trend over the last 3 months. During this period MGM delivered -5.98% and saw a maximum drawdown of -15.14%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in MGM till volatility reduces and a clear trend emerges.


MGM has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 23 Jun, 2017 to 5 Oct, 2018. Over the last 2 years 11 months and 7 days, MGM underperformed the SP500 index on 47% days. Which indicates that on days MGM underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months MGM was mostly loss making and delivered on average -0.06% per day. It's best return during this period (of +5.92%) was on Wednesday, 31 Oct, 2018. While it's worst loss in the same period (of -5.23%) was on Friday, 9 Nov, 2018. The longest stort-term trend during this period was 5 losing days, which started on 18 Oct, 2018 and ended on 24 Oct, 2018. This bearish trend lost -14.03% of investor capital.

The last 12 months saw MGM's investors making profits in 5 months and incurring losses in 7 months. MGM was less consistent in delivering monthly returs than SP500 index. MGM significantly outperformed SP500 index in Jul 2018, when it returned +11.4% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. MGM had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Aug 2018 to Oct 2018) during which period it delivered -12.25%. It is interesting to note that both MGM and SP500 index significantly outperform during months when quarterly/annual results are announced.

A stock broker is one who invests other people's money until its all gone.
-- Woody Allen

MGM is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in MGM's volatility from 26 Sep, 2018 to 1 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that MGM has significant positive skewness in it's return distribution. This indicates that investors can expect MGM to recover from drawdowns quickly. Which makes MGM a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in MGM derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.

MGM has more chance of extreme outcomes than the SP500 index. Therefore, MGM must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than MGM.

On a general note (since you are interested in MGM), two mid cap instruments that deserve special mention are TWTR and LULU. They have significantly outperformed the overall market.

Want to improve your Portfolio's performance?

Spotalpha's Portfolio optimizer is all you need to improve your returns and reduce your risk.
Optimize Portfolio NOW
Symbol Price {{retType}} | Tr.
{{detail.symbol}} {{detail.close}} {{detail.priceChange}}  {{detail.pctChange}}%  {{}} {{detail.trend}} 
If you liked what you read here ...

... we have a small favour to ask. Help us bring the power of algorithmic trading strategies to individual investors.

All content in this article was automatically generated by algorithms. This ensures that there are no human biases in the analysis provided. This approach to investing is not new and has been around for more than three decades. Yet, it has been available to only the most affluent or elite investors leaving individual investors to trade on emotions (such as fear and greed), intuition and poor analysis from third-parties. We want to change this.

We want to empower investors with all the tools and analysis required by them to make a rational investment decision.

If you found Spotalpha useful, consider making a contribution. For as little as $5 you can support our efforts and it takes less than a minute. Thank you. Contribute
Share with friends   WhatsApp   Facebook   Twitter