Correlation Between Apple and PENN Entertainment
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and PENN Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and PENN Entertainment, you can compare the effects of market volatilities on Apple 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 Apple with a short position of PENN Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and PENN Entertainment.
Diversification Opportunities for Apple and PENN Entertainment
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Apple and PENN is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and PENN Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment and Apple 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 Apple Inc 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 Apple i.e., Apple and PENN Entertainment go up and down completely randomly.
Pair Corralation between Apple and PENN Entertainment
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.34 times more return on investment than PENN Entertainment. However, Apple Inc is 2.93 times less risky than PENN Entertainment. It trades about -0.15 of its potential returns per unit of risk. PENN Entertainment is currently generating about -0.1 per unit of risk. If you would invest 23,615 in Apple Inc on October 14, 2024 and sell it today you would lose (665.00) from holding Apple Inc or give up 2.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. PENN Entertainment
Performance |
| Timeline |
| Apple Inc |
| PENN Entertainment |
Apple and PENN Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and PENN Entertainment
The main advantage of trading using opposite Apple and PENN Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. CONTAGIOUS GAMING INC | Apple vs. Wenzhou Kangning Hospital | Apple vs. EPSILON HEALTHCARE LTD | Apple vs. Siemens Healthineers AG |
| 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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