Correlation Between Century Casinos and Caesars Entertainment

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

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

Diversification Opportunities for Century Casinos and Caesars Entertainment

0.8

Correlation Coefficient

Century Casinos  Caesars Entertainment

Very poor diversification

The 3 months correlation between Century and Caesars is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Century Casinos and Caesars Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesars Entertainment and Century Casinos 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 Century Casinos 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 Century Casinos i.e., Century Casinos and Caesars Entertainment go up and down completely randomly.

Pair Corralation between Century Casinos and Caesars Entertainment

Given the investment horizon of 90 days Century Casinos is expected to under-perform the Caesars Entertainment. In addition to that, Century Casinos is 1.51 times more volatile than Caesars Entertainment. It trades about -0.17 of its total potential returns per unit of risk. Caesars Entertainment is currently generating about -0.13 per unit of volatility. If you would invest  3,282  in Caesars Entertainment on December 29, 2024 and sell it today you would lose (715.00) from holding Caesars Entertainment or give up 21.79% of portfolio value over 90 days.

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

Century Casinos  vs.  Caesars Entertainment

Century Casinos

Risk-Adjusted Performance

Very Weak

Over the last 90 days Century Casinos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly 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.

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. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Century Casinos and Caesars Entertainment

The main advantage of trading using opposite Century Casinos and Caesars Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Casinos 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 Century Casinos 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.