Correlation Between ENTAIN PLC and Penn National
Can any of the company-specific risk be diversified away by investing in both ENTAIN PLC and Penn National 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 ENTAIN PLC and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENTAIN PLC UNSPADR1 and Penn National Gaming, you can compare the effects of market volatilities on ENTAIN PLC and Penn National 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 ENTAIN PLC with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENTAIN PLC and Penn National.
Diversification Opportunities for ENTAIN PLC and Penn National
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ENTAIN and Penn is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ENTAIN PLC UNSPADR1 and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National Gaming and ENTAIN PLC 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 ENTAIN PLC UNSPADR1 are associated (or correlated) with Penn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of ENTAIN PLC i.e., ENTAIN PLC and Penn National go up and down completely randomly.
Pair Corralation between ENTAIN PLC and Penn National
Assuming the 90 days trading horizon ENTAIN PLC is expected to generate 1.04 times less return on investment than Penn National. But when comparing it to its historical volatility, ENTAIN PLC UNSPADR1 is 1.26 times less risky than Penn National. It trades about 0.08 of its potential returns per unit of risk. Penn National Gaming is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,597 in Penn National Gaming on September 1, 2024 and sell it today you would earn a total of 391.00 from holding Penn National Gaming or generate 24.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.24% |
| Values | Daily Returns |
ENTAIN PLC UNSPADR1 vs. Penn National Gaming
Performance |
| Timeline |
| ENTAIN PLC UNSPADR1 |
| Penn National Gaming |
ENTAIN PLC and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENTAIN PLC and Penn National
The main advantage of trading using opposite ENTAIN PLC and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENTAIN PLC position performs unexpectedly, Penn National 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 National will offset losses from the drop in Penn National's long position.| ENTAIN PLC vs. TEXAS ROADHOUSE | ENTAIN PLC vs. SERI INDUSTRIAL EO | ENTAIN PLC vs. Gaztransport Technigaz SA | ENTAIN PLC vs. Transportadora de Gas |
| Penn National vs. WESTLAKE CHEMICAL | Penn National vs. Marie Brizard Wine | Penn National vs. NorAm Drilling AS | Penn National vs. SEKISUI CHEMICAL |
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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