Correlation Between DFS Furniture and Penn National
Can any of the company-specific risk be diversified away by investing in both DFS Furniture 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 DFS Furniture and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and Penn National Gaming, you can compare the effects of market volatilities on DFS Furniture 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 DFS Furniture with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Penn National.
Diversification Opportunities for DFS Furniture and Penn National
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DFS and Penn is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC 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 DFS Furniture 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 DFS Furniture PLC 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 DFS Furniture i.e., DFS Furniture and Penn National go up and down completely randomly.
Pair Corralation between DFS Furniture and Penn National
Assuming the 90 days trading horizon DFS Furniture is expected to generate 1.38 times less return on investment than Penn National. But when comparing it to its historical volatility, DFS Furniture PLC is 1.45 times less risky than Penn National. It trades about 0.11 of its potential returns per unit of risk. Penn National Gaming is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,876 in Penn National Gaming on September 1, 2024 and sell it today you would earn a total of 112.00 from holding Penn National Gaming or generate 5.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. Penn National Gaming
Performance |
| Timeline |
| DFS Furniture PLC |
| Penn National Gaming |
DFS Furniture and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Penn National
The main advantage of trading using opposite DFS Furniture and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture 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.| DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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