Correlation Between PENN NATL and WFD Unibail
Can any of the company-specific risk be diversified away by investing in both PENN NATL and WFD Unibail 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 NATL and WFD Unibail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN NATL GAMING and WFD Unibail Rodamco, you can compare the effects of market volatilities on PENN NATL and WFD Unibail 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 NATL with a short position of WFD Unibail. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and WFD Unibail.
Diversification Opportunities for PENN NATL and WFD Unibail
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PENN and WFD is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and WFD Unibail Rodamco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WFD Unibail Rodamco and PENN NATL 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 NATL GAMING are associated (or correlated) with WFD Unibail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WFD Unibail Rodamco has no effect on the direction of PENN NATL i.e., PENN NATL and WFD Unibail go up and down completely randomly.
Pair Corralation between PENN NATL and WFD Unibail
Assuming the 90 days trading horizon PENN NATL GAMING is expected to generate 1.7 times more return on investment than WFD Unibail. However, PENN NATL is 1.7 times more volatile than WFD Unibail Rodamco. It trades about 0.12 of its potential returns per unit of risk. WFD Unibail Rodamco is currently generating about 0.0 per unit of risk. If you would invest 1,592 in PENN NATL GAMING on September 12, 2024 and sell it today you would earn a total of 280.00 from holding PENN NATL GAMING or generate 17.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PENN NATL GAMING vs. WFD Unibail Rodamco
Performance |
| Timeline |
| PENN NATL GAMING |
| WFD Unibail Rodamco |
PENN NATL and WFD Unibail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN NATL and WFD Unibail
The main advantage of trading using opposite PENN NATL and WFD Unibail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN NATL position performs unexpectedly, WFD Unibail 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 WFD Unibail will offset losses from the drop in WFD Unibail's long position.The idea behind PENN NATL GAMING and WFD Unibail Rodamco pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| WFD Unibail vs. URW EO 05 | WFD Unibail vs. Capital Counties Properties | WFD Unibail vs. FREY EO 250 | WFD Unibail vs. SERITAGE GWTH PRA |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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