Correlation Between Caesars Entertainment and Bluegreen Vacations

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

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

Diversification Opportunities for Caesars Entertainment and Bluegreen Vacations

-0.92

Correlation Coefficient

Caesars Entertainment  Bluegreen Vacations

Pay attention - limited upside

The 3 months correlation between Caesars and Bluegreen is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Caesars Entertainment and Bluegreen Vacations Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluegreen Vacations 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 Bluegreen Vacations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluegreen Vacations has no effect on the direction of Caesars Entertainment i.e., Caesars Entertainment and Bluegreen Vacations go up and down completely randomly.

Pair Corralation between Caesars Entertainment and Bluegreen Vacations

Considering the 90-day investment horizon Caesars Entertainment is expected to under-perform the Bluegreen Vacations. But the stock apears to be less risky and, when comparing its historical volatility, Caesars Entertainment is 1.15 times less risky than Bluegreen Vacations. The stock trades about -0.01 of its potential returns per unit of risk. The Bluegreen Vacations Holding is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,744  in Bluegreen Vacations Holding on October 3, 2024 and sell it today you would earn a total of  901.00  from holding Bluegreen Vacations Holding or generate 32.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	26.87%
Values	Daily Returns

Caesars Entertainment  vs.  Bluegreen Vacations Holding

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. 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 February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Bluegreen Vacations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bluegreen Vacations Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Bluegreen Vacations is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Caesars Entertainment and Bluegreen Vacations

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

The idea behind Caesars Entertainment and Bluegreen Vacations Holding 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.