Correlation Between PENN Entertainment, and Hormel Foods
Can any of the company-specific risk be diversified away by investing in both PENN Entertainment, and Hormel Foods 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 PENN Entertainment, and Hormel Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN Entertainment, and Hormel Foods, you can compare the effects of market volatilities on PENN Entertainment, and Hormel Foods 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 PENN Entertainment, with a short position of Hormel Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment, and Hormel Foods.
Diversification Opportunities for PENN Entertainment, and Hormel Foods
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PENN and Hormel is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment, and Hormel Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hormel Foods and PENN Entertainment, 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 PENN Entertainment, are associated (or correlated) with Hormel Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hormel Foods has no effect on the direction of PENN Entertainment, i.e., PENN Entertainment, and Hormel Foods go up and down completely randomly.
Pair Corralation between PENN Entertainment, and Hormel Foods
Assuming the 90 days trading horizon PENN Entertainment, is expected to generate 1.89 times more return on investment than Hormel Foods. However, PENN Entertainment, is 1.89 times more volatile than Hormel Foods. It trades about -0.01 of its potential returns per unit of risk. Hormel Foods is currently generating about -0.02 per unit of risk. If you would invest 1,630 in PENN Entertainment, on October 11, 2024 and sell it today you would lose (459.00) from holding PENN Entertainment, or give up 28.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PENN Entertainment, vs. Hormel Foods
Performance |
| Timeline |
| PENN Entertainment, |
| Hormel Foods |
PENN Entertainment, and Hormel Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN Entertainment, and Hormel Foods
The main advantage of trading using opposite PENN Entertainment, and Hormel Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN Entertainment, position performs unexpectedly, Hormel Foods 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 Hormel Foods will offset losses from the drop in Hormel Foods' long position.| PENN Entertainment, vs. Zoom Video Communications | PENN Entertainment, vs. Globus Medical, | PENN Entertainment, vs. ON Semiconductor | PENN Entertainment, vs. Charter Communications |
| Hormel Foods vs. Seagate Technology Holdings | Hormel Foods vs. The Home Depot | Hormel Foods vs. PENN Entertainment, | Hormel Foods vs. Micron 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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