Correlation Between Caesars Entertainment and Penn National
Can any of the company-specific risk be diversified away by investing in both Caesars Entertainment and Penn National 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 Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caesars Entertainment and Penn National Gaming, you can compare the effects of market volatilities on Caesars Entertainment and Penn National 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 Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caesars Entertainment and Penn National.
Diversification Opportunities for Caesars Entertainment and Penn National
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caesars and Penn is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Caesars Entertainment and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National Gaming 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 Penn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of Caesars Entertainment i.e., Caesars Entertainment and Penn National go up and down completely randomly.
Pair Corralation between Caesars Entertainment and Penn National
Considering the 90-day investment horizon Caesars Entertainment is expected to generate 0.92 times more return on investment than Penn National. However, Caesars Entertainment is 1.08 times less risky than Penn National. It trades about 0.03 of its potential returns per unit of risk. Penn National Gaming is currently generating about 0.03 per unit of risk. If you would invest 2,732 in Caesars Entertainment on March 12, 2025 and sell it today you would earn a total of 94.50 from holding Caesars Entertainment or generate 3.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caesars Entertainment vs. Penn National Gaming
Performance |
| Timeline |
| Caesars Entertainment |
| Penn National Gaming |
Caesars Entertainment and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caesars Entertainment and Penn National
The main advantage of trading using opposite Caesars Entertainment and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caesars Entertainment position performs unexpectedly, Penn National 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 Penn National will offset losses from the drop in Penn National's long position.| Caesars Entertainment vs. Las Vegas Sands | Caesars Entertainment vs. Wynn Resorts Limited | Caesars Entertainment vs. Penn National Gaming | Caesars Entertainment vs. Melco Resorts Entertainment |
| Penn National vs. DraftKings | Penn National vs. MGM Resorts International | Penn National vs. Caesars Entertainment | Penn National vs. Boyd Gaming |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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