Correlation Between Caesars Entertainment and Golden Entertainment

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

By analyzing existing cross correlation between Caesars Entertainment and Golden Entertainment, you can compare the effects of market volatilities on Caesars Entertainment and Golden Entertainment 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 Caesars Entertainment with a short position of Golden Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caesars Entertainment and Golden Entertainment.

Diversification Opportunities for Caesars Entertainment and Golden Entertainment

-0.26

Correlation Coefficient

Caesars Entertainment  Golden Entertainment

Very good diversification

The 3 months correlation between Caesars and Golden is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Caesars Entertainment and Golden Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Entertainment and Caesars Entertainment 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 Caesars Entertainment are associated (or correlated) with Golden Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Entertainment has no effect on the direction of Caesars Entertainment i.e., Caesars Entertainment and Golden Entertainment go up and down completely randomly.

Pair Corralation between Caesars Entertainment and Golden Entertainment

Considering the 90-day investment horizon Caesars Entertainment is expected to under-perform the Golden Entertainment. In addition to that, Caesars Entertainment is 1.14 times more volatile than Golden Entertainment. It trades about -0.33 of its total potential returns per unit of risk. Golden Entertainment is currently generating about 0.13 per unit of volatility. If you would invest  3,124  in Golden Entertainment on August 18, 2024 and sell it today you would earn a total of  195.00  from holding Golden Entertainment or generate 6.24% return on investment over 90 days.

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

Caesars Entertainment  vs.  Golden Entertainment

Caesars Entertainment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Caesars Entertainment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Caesars Entertainment is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Golden Entertainment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Entertainment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Golden Entertainment may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Caesars Entertainment and Golden Entertainment

The main advantage of trading using opposite Caesars Entertainment and Golden Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caesars Entertainment position performs unexpectedly, Golden Entertainment 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 Golden Entertainment will offset losses from the drop in Golden Entertainment's long position.

The idea behind Caesars Entertainment and Golden Entertainment 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 Stocks Directory module to find actively traded stocks across global markets.