Correlation Between Caesars Entertainment and Soho House

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

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

Diversification Opportunities for Caesars Entertainment and Soho House

-0.55

Correlation Coefficient

Caesars Entertainment  Soho House

Excellent diversification

The 3 months correlation between Caesars and Soho is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Caesars Entertainment and Soho House Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soho House 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 Soho House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soho House has no effect on the direction of Caesars Entertainment i.e., Caesars Entertainment and Soho House go up and down completely randomly.

Pair Corralation between Caesars Entertainment and Soho House

Considering the 90-day investment horizon Caesars Entertainment is expected to under-perform the Soho House. But the stock apears to be less risky and, when comparing its historical volatility, Caesars Entertainment is 3.99 times less risky than Soho House. The stock trades about -0.25 of its potential returns per unit of risk. The Soho House Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  545.00  in Soho House Co on October 9, 2024 and sell it today you would earn a total of  217.00  from holding Soho House Co or generate 39.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Caesars Entertainment  vs.  Soho House Co

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 fragile 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.

Soho House

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Soho House Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Soho House displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caesars Entertainment and Soho House

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

The idea behind Caesars Entertainment and Soho House Co 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.