Correlation Between NEXTDC and PENN Entertainment
Can any of the company-specific risk be diversified away by investing in both NEXTDC 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 NEXTDC and PENN Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXTDC LTD and PENN Entertainment, you can compare the effects of market volatilities on NEXTDC 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 NEXTDC with a short position of PENN Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXTDC and PENN Entertainment.
Diversification Opportunities for NEXTDC and PENN Entertainment
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between NEXTDC and PENN is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding NEXTDC LTD and PENN Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment and NEXTDC 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 NEXTDC LTD 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 NEXTDC i.e., NEXTDC and PENN Entertainment go up and down completely randomly.
Pair Corralation between NEXTDC and PENN Entertainment
Assuming the 90 days horizon NEXTDC LTD is expected to generate 0.8 times more return on investment than PENN Entertainment. However, NEXTDC LTD is 1.26 times less risky than PENN Entertainment. It trades about 0.03 of its potential returns per unit of risk. PENN Entertainment is currently generating about -0.01 per unit of risk. If you would invest 835.00 in NEXTDC LTD on October 26, 2024 and sell it today you would earn a total of 110.00 from holding NEXTDC LTD or generate 13.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
NEXTDC LTD vs. PENN Entertainment
Performance |
| Timeline |
| NEXTDC LTD |
| PENN Entertainment |
NEXTDC and PENN Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXTDC and PENN Entertainment
The main advantage of trading using opposite NEXTDC and PENN Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXTDC 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.| NEXTDC vs. PENN Entertainment | NEXTDC vs. Nexstar Media Group | NEXTDC vs. RCS MediaGroup SpA | NEXTDC vs. ZINC MEDIA GR |
| PENN Entertainment vs. Apple Inc | PENN Entertainment vs. Apple Inc | PENN Entertainment vs. Apple Inc | PENN Entertainment vs. Apple Inc |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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