Correlation Between Haier Smart and PENN Entertainment
Can any of the company-specific risk be diversified away by investing in both Haier Smart 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 Haier Smart and PENN Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haier Smart Home and PENN Entertainment, you can compare the effects of market volatilities on Haier Smart 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 Haier Smart with a short position of PENN Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and PENN Entertainment.
Diversification Opportunities for Haier Smart and PENN Entertainment
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Haier and PENN is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and PENN Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment and Haier Smart 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 Haier Smart Home 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 Haier Smart i.e., Haier Smart and PENN Entertainment go up and down completely randomly.
Pair Corralation between Haier Smart and PENN Entertainment
Assuming the 90 days trading horizon Haier Smart Home is expected to under-perform the PENN Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Haier Smart Home is 2.11 times less risky than PENN Entertainment. The stock trades about -0.01 of its potential returns per unit of risk. The PENN Entertainment is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,792 in PENN Entertainment on November 7, 2024 and sell it today you would earn a total of 171.00 from holding PENN Entertainment or generate 9.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haier Smart Home vs. PENN Entertainment
Performance |
| Timeline |
| Haier Smart Home |
| PENN Entertainment |
Haier Smart and PENN Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haier Smart and PENN Entertainment
The main advantage of trading using opposite Haier Smart and PENN Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haier Smart 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.| Haier Smart vs. Nok Airlines PCL | Haier Smart vs. MidCap Financial Investment | Haier Smart vs. AGNC INVESTMENT | Haier Smart vs. Guangdong Investment Limited |
| PENN Entertainment vs. Singapore Telecommunications Limited | PENN Entertainment vs. GRIFFIN MINING LTD | PENN Entertainment vs. Cairo Communication SpA | PENN Entertainment vs. Jacquet Metal Service |
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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