Correlation Between Allegheny Technologies and PENN Entertainment
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies 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 Allegheny Technologies and PENN Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegheny Technologies Incorporated and PENN Entertainment, you can compare the effects of market volatilities on Allegheny Technologies 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 Allegheny Technologies with a short position of PENN Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and PENN Entertainment.
Diversification Opportunities for Allegheny Technologies and PENN Entertainment
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allegheny and PENN is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and PENN Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment and Allegheny Technologies 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 Allegheny Technologies Incorporated 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 Allegheny Technologies i.e., Allegheny Technologies and PENN Entertainment go up and down completely randomly.
Pair Corralation between Allegheny Technologies and PENN Entertainment
Assuming the 90 days trading horizon Allegheny Technologies Incorporated is expected to generate 0.67 times more return on investment than PENN Entertainment. However, Allegheny Technologies Incorporated is 1.49 times less risky than PENN Entertainment. It trades about 0.06 of its potential returns per unit of risk. PENN Entertainment is currently generating about 0.01 per unit of risk. If you would invest 4,021 in Allegheny Technologies Incorporated on November 8, 2024 and sell it today you would earn a total of 2,259 from holding Allegheny Technologies Incorporated or generate 56.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. PENN Entertainment
Performance |
| Timeline |
| Allegheny Technologies |
| PENN Entertainment |
Allegheny Technologies and PENN Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and PENN Entertainment
The main advantage of trading using opposite Allegheny Technologies and PENN Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies 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.| Allegheny Technologies vs. Apple Inc | Allegheny Technologies vs. Apple Inc | Allegheny Technologies vs. Apple Inc | Allegheny Technologies vs. Apple Inc |
| PENN Entertainment vs. SIVERS SEMICONDUCTORS AB | PENN Entertainment vs. NorAm Drilling AS | PENN Entertainment vs. Volkswagen AG | PENN Entertainment vs. Darden Restaurants |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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