Correlation Between United Parks and Caesars Entertainment

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

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

Diversification Opportunities for United Parks and Caesars Entertainment

0.56

Correlation Coefficient

United Parks  Caesars Entertainment

Very weak diversification

The 3 months correlation between United and Caesars is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding United Parks Resorts and Caesars Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesars Entertainment and United Parks 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 United Parks Resorts 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 United Parks i.e., United Parks and Caesars Entertainment go up and down completely randomly.

Pair Corralation between United Parks and Caesars Entertainment

Given the investment horizon of 90 days United Parks Resorts is expected to generate 0.87 times more return on investment than Caesars Entertainment. However, United Parks Resorts is 1.15 times less risky than Caesars Entertainment. It trades about -0.07 of its potential returns per unit of risk. Caesars Entertainment is currently generating about -0.08 per unit of risk. If you would invest  5,411  in United Parks Resorts on December 21, 2024 and sell it today you would lose (533.00) from holding United Parks Resorts or give up 9.85% of portfolio value over 90 days.

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

United Parks Resorts  vs.  Caesars Entertainment

United Parks Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Parks Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private 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 United Parks and Caesars Entertainment

The main advantage of trading using opposite United Parks and Caesars Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parks 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 United Parks Resorts 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.