Correlation Between PENN NATL and Sixt Leasing
Can any of the company-specific risk be diversified away by investing in both PENN NATL and Sixt Leasing 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 Sixt Leasing 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 Sixt Leasing SE, you can compare the effects of market volatilities on PENN NATL and Sixt Leasing 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 Sixt Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and Sixt Leasing.
Diversification Opportunities for PENN NATL and Sixt Leasing
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PENN and Sixt is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and Sixt Leasing SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt Leasing SE 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 Sixt Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt Leasing SE has no effect on the direction of PENN NATL i.e., PENN NATL and Sixt Leasing go up and down completely randomly.
Pair Corralation between PENN NATL and Sixt Leasing
Assuming the 90 days trading horizon PENN NATL GAMING is expected to under-perform the Sixt Leasing. In addition to that, PENN NATL is 1.05 times more volatile than Sixt Leasing SE. It trades about -0.09 of its total potential returns per unit of risk. Sixt Leasing SE is currently generating about -0.1 per unit of volatility. If you would invest 985.00 in Sixt Leasing SE on September 12, 2024 and sell it today you would lose (60.00) from holding Sixt Leasing SE or give up 6.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PENN NATL GAMING vs. Sixt Leasing SE
Performance |
| Timeline |
| PENN NATL GAMING |
| Sixt Leasing SE |
PENN NATL and Sixt Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN NATL and Sixt Leasing
The main advantage of trading using opposite PENN NATL and Sixt Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN NATL position performs unexpectedly, Sixt Leasing 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 Sixt Leasing will offset losses from the drop in Sixt Leasing's long position.The idea behind PENN NATL GAMING and Sixt Leasing SE 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.| Sixt Leasing vs. Apple Inc | Sixt Leasing vs. Apple Inc | Sixt Leasing vs. Apple Inc | Sixt Leasing vs. Apple Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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