Correlation Between Autoliv and Caesars Entertainment
Can any of the company-specific risk be diversified away by investing in both Autoliv 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 Autoliv and Caesars Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autoliv and Caesars Entertainment, you can compare the effects of market volatilities on Autoliv 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 Autoliv with a short position of Caesars Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autoliv and Caesars Entertainment.
Diversification Opportunities for Autoliv and Caesars Entertainment
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Autoliv and Caesars is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Caesars Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesars Entertainment and Autoliv 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 Autoliv 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 Autoliv i.e., Autoliv and Caesars Entertainment go up and down completely randomly.
Pair Corralation between Autoliv and Caesars Entertainment
Considering the 90-day investment horizon Autoliv is expected to generate 0.64 times more return on investment than Caesars Entertainment. However, Autoliv is 1.55 times less risky than Caesars Entertainment. It trades about 0.03 of its potential returns per unit of risk. Caesars Entertainment is currently generating about -0.01 per unit of risk. If you would invest 8,017 in Autoliv on August 24, 2024 and sell it today you would earn a total of 1,872 from holding Autoliv or generate 23.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autoliv vs. Caesars Entertainment
Performance |
| Timeline |
| Autoliv |
| Caesars Entertainment |
Autoliv and Caesars Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autoliv and Caesars Entertainment
The main advantage of trading using opposite Autoliv and Caesars Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autoliv 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 Autoliv 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.| 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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