Correlation Between Las Vegas and Caesars Entertainment

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Can any of the company-specific risk be diversified away by investing in both Las Vegas and Caesars 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 Las Vegas and Caesars Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Las Vegas Sands and Caesars Entertainment, you can compare the effects of market volatilities on Las Vegas and Caesars 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 Las Vegas with a short position of Caesars Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Las Vegas and Caesars Entertainment.

Diversification Opportunities for Las Vegas and Caesars Entertainment

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Las and Caesars is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Las Vegas Sands and Caesars Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesars Entertainment and Las Vegas 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 Las Vegas Sands are associated (or correlated) with Caesars Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caesars Entertainment has no effect on the direction of Las Vegas i.e., Las Vegas and Caesars Entertainment go up and down completely randomly.

Pair Corralation between Las Vegas and Caesars Entertainment

Considering the 90-day investment horizon Las Vegas Sands is expected to under-perform the Caesars Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Las Vegas Sands is 1.53 times less risky than Caesars Entertainment. The stock trades about -0.02 of its potential returns per unit of risk. The Caesars Entertainment is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  4,165  in Caesars Entertainment on August 18, 2024 and sell it today you would lose (461.00) from holding Caesars Entertainment or give up 11.07% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Las Vegas Sands  vs.  Caesars Entertainment

 Performance 
       Timeline  
Las Vegas Sands 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Las Vegas Sands are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Las Vegas unveiled solid returns over the last few months and may actually be approaching a breakup point.
Caesars Entertainment 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
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.

Las Vegas and Caesars Entertainment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Las Vegas and Caesars Entertainment

The main advantage of trading using opposite Las Vegas and Caesars Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Las Vegas position performs unexpectedly, Caesars 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 Caesars Entertainment will offset losses from the drop in Caesars Entertainment's long position.
The idea behind Las Vegas Sands and Caesars 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.
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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