Correlation Between PENN Entertainment, and TechnipFMC Plc
Can any of the company-specific risk be diversified away by investing in both PENN Entertainment, and TechnipFMC Plc 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 TechnipFMC Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN Entertainment, and TechnipFMC plc, you can compare the effects of market volatilities on PENN Entertainment, and TechnipFMC Plc 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 TechnipFMC Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment, and TechnipFMC Plc.
Diversification Opportunities for PENN Entertainment, and TechnipFMC Plc
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PENN and TechnipFMC is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment, and TechnipFMC plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC plc 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 TechnipFMC Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechnipFMC plc has no effect on the direction of PENN Entertainment, i.e., PENN Entertainment, and TechnipFMC Plc go up and down completely randomly.
Pair Corralation between PENN Entertainment, and TechnipFMC Plc
Assuming the 90 days trading horizon PENN Entertainment, is expected to generate 2.04 times less return on investment than TechnipFMC Plc. But when comparing it to its historical volatility, PENN Entertainment, is 1.18 times less risky than TechnipFMC Plc. It trades about 0.15 of its potential returns per unit of risk. TechnipFMC plc is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 13,794 in TechnipFMC plc on October 24, 2024 and sell it today you would earn a total of 5,866 from holding TechnipFMC plc or generate 42.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PENN Entertainment, vs. TechnipFMC plc
Performance |
| Timeline |
| PENN Entertainment, |
| TechnipFMC plc |
PENN Entertainment, and TechnipFMC Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN Entertainment, and TechnipFMC Plc
The main advantage of trading using opposite PENN Entertainment, and TechnipFMC Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN Entertainment, position performs unexpectedly, TechnipFMC Plc 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 TechnipFMC Plc will offset losses from the drop in TechnipFMC Plc's long position.| PENN Entertainment, vs. Electronic Arts | PENN Entertainment, vs. Live Nation Entertainment, | PENN Entertainment, vs. British American Tobacco | PENN Entertainment, vs. Melco Resorts Entertainment |
| TechnipFMC Plc vs. Verizon Communications | TechnipFMC Plc vs. Spotify Technology SA | TechnipFMC Plc vs. DENTSPLY SIRONA | TechnipFMC Plc vs. PENN Entertainment, |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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