Correlation Between PENN Entertainment, and Microchip Technology
Can any of the company-specific risk be diversified away by investing in both PENN Entertainment, and Microchip Technology 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 Microchip Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN Entertainment, and Microchip Technology Incorporated, you can compare the effects of market volatilities on PENN Entertainment, and Microchip Technology 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 Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment, and Microchip Technology.
Diversification Opportunities for PENN Entertainment, and Microchip Technology
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PENN and Microchip is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment, and Microchip Technology Incorpora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology 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 Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of PENN Entertainment, i.e., PENN Entertainment, and Microchip Technology go up and down completely randomly.
Pair Corralation between PENN Entertainment, and Microchip Technology
Assuming the 90 days trading horizon PENN Entertainment, is expected to generate 0.08 times more return on investment than Microchip Technology. However, PENN Entertainment, is 12.92 times less risky than Microchip Technology. It trades about -0.31 of its potential returns per unit of risk. Microchip Technology Incorporated is currently generating about -0.17 per unit of risk. If you would invest 1,182 in PENN Entertainment, on October 12, 2024 and sell it today you would lose (11.00) from holding PENN Entertainment, or give up 0.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
PENN Entertainment, vs. Microchip Technology Incorpora
Performance |
| Timeline |
| PENN Entertainment, |
| Microchip Technology |
PENN Entertainment, and Microchip Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN Entertainment, and Microchip Technology
The main advantage of trading using opposite PENN Entertainment, and Microchip Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN Entertainment, position performs unexpectedly, Microchip Technology 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 Microchip Technology will offset losses from the drop in Microchip Technology's long position.| PENN Entertainment, vs. Taiwan Semiconductor Manufacturing | PENN Entertainment, vs. Apple Inc | PENN Entertainment, vs. Alibaba Group Holding | PENN Entertainment, vs. Banco Santander Chile |
| Microchip Technology vs. PENN Entertainment, | Microchip Technology vs. Metalrgica Riosulense SA | Microchip Technology vs. Mangels Industrial SA | Microchip Technology vs. Multilaser Industrial SA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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