Correlation Between Penn National and Sphere Entertainment
Can any of the company-specific risk be diversified away by investing in both Penn National and Sphere 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 Penn National and Sphere Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penn National Gaming and Sphere Entertainment Co, you can compare the effects of market volatilities on Penn National and Sphere 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 Penn National with a short position of Sphere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Sphere Entertainment.
Diversification Opportunities for Penn National and Sphere Entertainment
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Penn and Sphere is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and Penn National 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 National Gaming are associated (or correlated) with Sphere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere Entertainment has no effect on the direction of Penn National i.e., Penn National and Sphere Entertainment go up and down completely randomly.
Pair Corralation between Penn National and Sphere Entertainment
Given the investment horizon of 90 days Penn National is expected to generate 1.65 times less return on investment than Sphere Entertainment. In addition to that, Penn National is 1.39 times more volatile than Sphere Entertainment Co. It trades about 0.13 of its total potential returns per unit of risk. Sphere Entertainment Co is currently generating about 0.31 per unit of volatility. If you would invest 4,151 in Sphere Entertainment Co on November 3, 2024 and sell it today you would earn a total of 528.00 from holding Sphere Entertainment Co or generate 12.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. Sphere Entertainment Co
Performance |
| Timeline |
| Penn National Gaming |
| Sphere Entertainment |
Penn National and Sphere Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Sphere Entertainment
The main advantage of trading using opposite Penn National and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Sphere 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 Sphere Entertainment will offset losses from the drop in Sphere Entertainment's long position.| Penn National vs. DraftKings | Penn National vs. MGM Resorts International | Penn National vs. Caesars Entertainment | Penn National vs. Boyd Gaming |
| Sphere Entertainment vs. Sonida Senior Living | Sphere Entertainment vs. Universal Music Group | Sphere Entertainment vs. NetEase | Sphere Entertainment vs. Jabil Circuit |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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