Question 1: When is it a better time to buy MGM Resorts International stock - after a drop or after a rise?Answer:Consider two situations,Case 1: MGM Resorts International stock drops by -5% or more in a monthCase 2: MGM Resorts International stock rises by 5% or more in a month
MGM stock fares better after Case 1, with a 63.8% chance of rise over the next month (21 trading days) under Case 1 (where the stock has suffered a 5% loss over the previous month), versus, a 51.4% chance of rise for Case 2. This would suggest that it is better to buy MGM stock after a recent drop
Try the Trefis machine learning engine to see for yourself how MGM Resorts International stock is likely to behave after any specific gain or loss over a period.
Question 2: Does MGM Resorts International stock have a higher chance of rise after a steeper drop?Answer:Trefis machine learning engine's calculations show that for most stocks, the chance of rise reduces as the drop gets steeper. However, after unusually high declines of -10% or more, there is usually an improvement in the chance of rise. This makes sense intuitively, as markets often overreact to bad news around a company
For MGM stock, the probability of positive returns over the next month (21 trading days) after a drop of N% over the last 21 trading days is detailed in the table below, along with the positive return probability for the S&P500:
Previous 21 days% DropNext 21 daysPositive Return ProbabilityMGM S&P 500-1%59.2%71.1%-3%62.2%73.0%-5%63.8%72.7%-7.5%65.1%78.3%-10%73.9%78.4%
Question 3: What about MGM Resorts International stock's chance of rise after a recent rally?
Answer:MGM's probability of positive returns over the next month (21 trading days) after a gain of N% over the last 21 trading days is detailed in the table below, along with the positive return probability for the S&P500:
Previous 21 days% RiseNext 21 daysPositive Return ProbabilityMGM S&P 500+1%50.8%67.8%+3%50.5%68.5%+5%51.4%67.0%+7.5%52.3%68.4%+10%53.4%74.2%