Correlation Between Caesars Entertainment and Dominos Pizza

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

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

Diversification Opportunities for Caesars Entertainment and Dominos Pizza

0.06

Correlation Coefficient

Caesars Entertainment  Dominos Pizza

Significant diversification

The 3 months correlation between Caesars and Dominos is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Caesars Entertainment and Dominos Pizza Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominos Pizza Common 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 Dominos Pizza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominos Pizza Common has no effect on the direction of Caesars Entertainment i.e., Caesars Entertainment and Dominos Pizza go up and down completely randomly.

Pair Corralation between Caesars Entertainment and Dominos Pizza

Considering the 90-day investment horizon Caesars Entertainment is expected to under-perform the Dominos Pizza. In addition to that, Caesars Entertainment is 1.46 times more volatile than Dominos Pizza Common. It trades about -0.03 of its total potential returns per unit of risk. Dominos Pizza Common is currently generating about 0.02 per unit of volatility. If you would invest  42,776  in Dominos Pizza Common on October 24, 2024 and sell it today you would earn a total of  1,207  from holding Dominos Pizza Common or generate 2.82% return on investment over 90 days.

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

Caesars Entertainment  vs.  Dominos Pizza Common

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.

Dominos Pizza Common

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dominos Pizza Common are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Dominos Pizza may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Caesars Entertainment and Dominos Pizza

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

The idea behind Caesars Entertainment and Dominos Pizza Common 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.