Correlation Between Caesars Entertainment and Hilton Worldwide

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

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

Diversification Opportunities for Caesars Entertainment and Hilton Worldwide

0.89

Correlation Coefficient

Caesars Entertainment  Hilton Worldwide

Very poor diversification

The 3 months correlation between Caesars and Hilton is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Caesars Entertainment and Hilton Worldwide Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Worldwide Holdings 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 Hilton Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Worldwide Holdings has no effect on the direction of Caesars Entertainment i.e., Caesars Entertainment and Hilton Worldwide go up and down completely randomly.

Pair Corralation between Caesars Entertainment and Hilton Worldwide

Considering the 90-day investment horizon Caesars Entertainment is expected to under-perform the Hilton Worldwide. In addition to that, Caesars Entertainment is 1.63 times more volatile than Hilton Worldwide Holdings. It trades about -0.14 of its total potential returns per unit of risk. Hilton Worldwide Holdings is currently generating about -0.14 per unit of volatility. If you would invest  24,316  in Hilton Worldwide Holdings on January 8, 2025 and sell it today you would lose (3,902) from holding Hilton Worldwide Holdings or give up 16.05% of portfolio value over 90 days.

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

Caesars Entertainment  vs.  Hilton Worldwide Holdings

Caesars Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caesars Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Hilton Worldwide Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hilton Worldwide Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Caesars Entertainment and Hilton Worldwide

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

The idea behind Caesars Entertainment and Hilton Worldwide Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.