Correlation Between ADYEN NV and PENN Entertainment
Can any of the company-specific risk be diversified away by investing in both ADYEN NV and PENN 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 ADYEN NV and PENN Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADYEN NV UNSPADR001 and PENN Entertainment, you can compare the effects of market volatilities on ADYEN NV and PENN 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 ADYEN NV with a short position of PENN Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADYEN NV and PENN Entertainment.
Diversification Opportunities for ADYEN NV and PENN Entertainment
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ADYEN and PENN is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ADYEN NV UNSPADR001 and PENN Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment and ADYEN NV 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 ADYEN NV UNSPADR001 are associated (or correlated) with PENN Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN Entertainment has no effect on the direction of ADYEN NV i.e., ADYEN NV and PENN Entertainment go up and down completely randomly.
Pair Corralation between ADYEN NV and PENN Entertainment
Assuming the 90 days trading horizon ADYEN NV UNSPADR001 is expected to generate 1.26 times more return on investment than PENN Entertainment. However, ADYEN NV is 1.26 times more volatile than PENN Entertainment. It trades about 0.12 of its potential returns per unit of risk. PENN Entertainment is currently generating about 0.07 per unit of risk. If you would invest 970.00 in ADYEN NV UNSPADR001 on November 3, 2024 and sell it today you would earn a total of 550.00 from holding ADYEN NV UNSPADR001 or generate 56.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADYEN NV UNSPADR001 vs. PENN Entertainment
Performance |
| Timeline |
| ADYEN NV UNSPADR001 |
| PENN Entertainment |
ADYEN NV and PENN Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADYEN NV and PENN Entertainment
The main advantage of trading using opposite ADYEN NV and PENN Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADYEN NV position performs unexpectedly, PENN 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 PENN Entertainment will offset losses from the drop in PENN Entertainment's long position.| ADYEN NV vs. Gold Road Resources | ADYEN NV vs. TRAINLINE PLC LS | ADYEN NV vs. Agilent Technologies | ADYEN NV vs. BioNTech SE |
| PENN Entertainment vs. Corsair Gaming | PENN Entertainment vs. Delta Air Lines | PENN Entertainment vs. Zijin Mining Group | PENN Entertainment vs. Calibre Mining Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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