Correlation Between Caesars Entertainment, and Target

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

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

Diversification Opportunities for Caesars Entertainment, and Target

0.65

Correlation Coefficient

Caesars Entertainment,  Target

Poor diversification

The 3 months correlation between Caesars and Target is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Caesars Entertainment, and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Caesars Entertainment, i.e., Caesars Entertainment, and Target go up and down completely randomly.

Pair Corralation between Caesars Entertainment, and Target

Assuming the 90 days trading horizon Caesars Entertainment, is expected to generate 1.27 times more return on investment than Target. However, Caesars Entertainment, is 1.27 times more volatile than Target. It trades about -0.15 of its potential returns per unit of risk. Target is currently generating about -0.26 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	Significant
Accuracy	100.0%
Values	Daily Returns

Caesars Entertainment,  vs.  Target

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.

Target

Risk-Adjusted Performance

Very Weak

Over the last 90 days Target 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 Target

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

The idea behind Caesars Entertainment, and Target 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..