Correlation Between Hilton Grand and Caesars Entertainment

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

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

Diversification Opportunities for Hilton Grand and Caesars Entertainment

0.84

Correlation Coefficient

Hilton Grand  Caesars Entertainment

Very poor diversification

The 3 months correlation between Hilton and Caesars is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Grand Vacations and Caesars Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesars Entertainment and Hilton Grand 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 Hilton Grand Vacations 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 Hilton Grand i.e., Hilton Grand and Caesars Entertainment go up and down completely randomly.

Pair Corralation between Hilton Grand and Caesars Entertainment

Considering the 90-day investment horizon Hilton Grand is expected to generate 1.23 times less return on investment than Caesars Entertainment. But when comparing it to its historical volatility, Hilton Grand Vacations is 1.16 times less risky than Caesars Entertainment. It trades about 0.05 of its potential returns per unit of risk. Caesars Entertainment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,759  in Caesars Entertainment on November 20, 2024 and sell it today you would earn a total of  217.00  from holding Caesars Entertainment or generate 5.77% return on investment over 90 days.

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

Hilton Grand Vacations  vs.  Caesars Entertainment

Hilton Grand Vacations

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Grand Vacations are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, Hilton Grand is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Caesars Entertainment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Caesars Entertainment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Caesars Entertainment may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Hilton Grand and Caesars Entertainment

The main advantage of trading using opposite Hilton Grand and Caesars Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Grand 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 Hilton Grand Vacations 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.