Correlation Between Applied Materials, and Caesars Entertainment,

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

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

Diversification Opportunities for Applied Materials, and Caesars Entertainment,

0.02

Correlation Coefficient

Applied Materials,  Caesars Entertainment,

Significant diversification

The 3 months correlation between Applied and Caesars is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials, and Caesars Entertainment, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesars Entertainment, and Applied Materials, 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 Applied Materials, 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 Applied Materials, i.e., Applied Materials, and Caesars Entertainment, go up and down completely randomly.

Pair Corralation between Applied Materials, and Caesars Entertainment,

Assuming the 90 days trading horizon Applied Materials, is expected to generate 1.57 times more return on investment than Caesars Entertainment,. However, Applied Materials, is 1.57 times more volatile than Caesars Entertainment,. It trades about 0.07 of its potential returns per unit of risk. Caesars Entertainment, is currently generating about -0.01 per unit of risk. If you would invest  5,926  in Applied Materials, on October 23, 2024 and sell it today you would earn a total of  6,441  from holding Applied Materials, or generate 108.69% return on investment over 90 days.

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

Applied Materials,  vs.  Caesars Entertainment,

Applied Materials,

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Applied Materials, sustained solid returns over the last few months and may actually be approaching a breakup point.

Caesars Entertainment,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caesars Entertainment, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Applied Materials, and Caesars Entertainment,

The main advantage of trading using opposite Applied Materials, and Caesars Entertainment, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials, 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 Applied Materials, 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .