Correlation Between Caesars Entertainment, and NatWest Group

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

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

Diversification Opportunities for Caesars Entertainment, and NatWest Group

-0.55

Correlation Coefficient

Caesars Entertainment,  NatWest Group

Excellent diversification

The 3 months correlation between Caesars and NatWest is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Caesars Entertainment, and NatWest Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NatWest Group plc 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 NatWest Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NatWest Group plc has no effect on the direction of Caesars Entertainment, i.e., Caesars Entertainment, and NatWest Group go up and down completely randomly.

Pair Corralation between Caesars Entertainment, and NatWest Group

Assuming the 90 days trading horizon Caesars Entertainment, is expected to under-perform the NatWest Group. But the stock apears to be less risky and, when comparing its historical volatility, Caesars Entertainment, is 2.18 times less risky than NatWest Group. The stock trades about -0.26 of its potential returns per unit of risk. The NatWest Group plc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  6,252  in NatWest Group plc on October 24, 2024 and sell it today you would lose (32.00) from holding NatWest Group plc or give up 0.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Caesars Entertainment,  vs.  NatWest Group plc

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.

NatWest Group plc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NatWest Group plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NatWest Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caesars Entertainment, and NatWest Group

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

The idea behind Caesars Entertainment, and NatWest Group plc 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 Transaction History module to view history of all your transactions and understand their impact on performance.