Correlation Between Caesars Entertainment, and PayPal Holdings

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

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

Diversification Opportunities for Caesars Entertainment, and PayPal Holdings

0.49

Correlation Coefficient

Caesars Entertainment,  PayPal Holdings

Very weak diversification

The 3 months correlation between Caesars and PayPal is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Caesars Entertainment, and PayPal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal 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 PayPal Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PayPal Holdings has no effect on the direction of Caesars Entertainment, i.e., Caesars Entertainment, and PayPal Holdings go up and down completely randomly.

Pair Corralation between Caesars Entertainment, and PayPal Holdings

Assuming the 90 days trading horizon Caesars Entertainment, is expected to generate 1.0 times more return on investment than PayPal Holdings. However, Caesars Entertainment, is 1.0 times less risky than PayPal Holdings. It trades about -0.15 of its potential returns per unit of risk. PayPal Holdings is currently generating about -0.2 per unit of risk. If you would invest  2,036  in Caesars Entertainment, on December 25, 2024 and sell it today you would lose (470.00) from holding Caesars Entertainment, or give up 23.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Caesars Entertainment,  vs.  PayPal 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. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

PayPal Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PayPal Holdings 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Caesars Entertainment, and PayPal Holdings

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

The idea behind Caesars Entertainment, and PayPal 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.