Correlation Between Microsoft and Caesars Entertainment
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Caesars Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Caesars Entertainment, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Caesars Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Caesars Entertainment.
Diversification Opportunities for Microsoft and Caesars Entertainment
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Caesars is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Caesars Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesars Entertainment and Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Caesars Entertainment go up and down completely randomly.
Pair Corralation between Microsoft and Caesars Entertainment
Given the investment horizon of 90 days Microsoft is expected to generate 0.54 times more return on investment than Caesars Entertainment. However, Microsoft is 1.86 times less risky than Caesars Entertainment. It trades about 0.16 of its potential returns per unit of risk. Caesars Entertainment is currently generating about -0.02 per unit of risk. If you would invest 38,799 in Microsoft on March 17, 2025 and sell it today you would earn a total of 8,697 from holding Microsoft or generate 22.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Caesars Entertainment
Performance |
| Timeline |
| Microsoft |
| Caesars Entertainment |
Microsoft and Caesars Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Caesars Entertainment
The main advantage of trading using opposite Microsoft and Caesars Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Caesars Entertainment vs. Las Vegas Sands | Caesars Entertainment vs. Wynn Resorts Limited | Caesars Entertainment vs. Penn National Gaming | Caesars Entertainment vs. Melco Resorts Entertainment |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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