Correlation Between H2O Retailing and PENN Entertainment
Can any of the company-specific risk be diversified away by investing in both H2O Retailing 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 H2O Retailing and PENN Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and PENN Entertainment, you can compare the effects of market volatilities on H2O Retailing 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 H2O Retailing with a short position of PENN Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and PENN Entertainment.
Diversification Opportunities for H2O Retailing and PENN Entertainment
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between H2O and PENN is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing and PENN Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment and H2O Retailing 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 H2O Retailing 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 H2O Retailing i.e., H2O Retailing and PENN Entertainment go up and down completely randomly.
Pair Corralation between H2O Retailing and PENN Entertainment
Assuming the 90 days horizon H2O Retailing is expected to generate 0.64 times more return on investment than PENN Entertainment. However, H2O Retailing is 1.57 times less risky than PENN Entertainment. It trades about -0.01 of its potential returns per unit of risk. PENN Entertainment is currently generating about -0.07 per unit of risk. If you would invest 1,350 in H2O Retailing on October 12, 2024 and sell it today you would lose (10.00) from holding H2O Retailing or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
H2O Retailing vs. PENN Entertainment
Performance |
| Timeline |
| H2O Retailing |
| PENN Entertainment |
H2O Retailing and PENN Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H2O Retailing and PENN Entertainment
The main advantage of trading using opposite H2O Retailing and PENN Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing 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.| H2O Retailing vs. PEPKOR LTD | H2O Retailing vs. Superior Plus Corp | H2O Retailing vs. NMI Holdings | H2O Retailing vs. SIVERS SEMICONDUCTORS AB |
| PENN Entertainment vs. Ross Stores | PENN Entertainment vs. Costco Wholesale Corp | PENN Entertainment vs. H2O Retailing | PENN Entertainment vs. Yuexiu Transport Infrastructure |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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