Correlation Between New Oriental and PENN Entertainment,
Can any of the company-specific risk be diversified away by investing in both New Oriental 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 New Oriental and PENN Entertainment, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and PENN Entertainment,, you can compare the effects of market volatilities on New Oriental 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 New Oriental with a short position of PENN Entertainment,. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and PENN Entertainment,.
Diversification Opportunities for New Oriental and PENN Entertainment,
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and PENN is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and PENN Entertainment, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment, and New Oriental 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 New Oriental Education 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 New Oriental i.e., New Oriental and PENN Entertainment, go up and down completely randomly.
Pair Corralation between New Oriental and PENN Entertainment,
Assuming the 90 days trading horizon New Oriental Education is expected to generate 10.91 times more return on investment than PENN Entertainment,. However, New Oriental is 10.91 times more volatile than PENN Entertainment,. It trades about 0.1 of its potential returns per unit of risk. PENN Entertainment, is currently generating about -0.31 per unit of risk. If you would invest 2,529 in New Oriental Education on October 12, 2024 and sell it today you would earn a total of 80.00 from holding New Oriental Education or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Oriental Education vs. PENN Entertainment,
Performance |
| Timeline |
| New Oriental Education |
| PENN Entertainment, |
New Oriental and PENN Entertainment, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and PENN Entertainment,
The main advantage of trading using opposite New Oriental and PENN Entertainment, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental 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.| New Oriental vs. Check Point Software | New Oriental vs. Micron Technology | New Oriental vs. Roper Technologies, | New Oriental vs. Ares Management |
| PENN Entertainment, vs. Micron Technology | PENN Entertainment, vs. Align Technology | PENN Entertainment, vs. Verizon Communications | PENN Entertainment, vs. DXC Technology |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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