Correlation Between PENN NATL and ManpowerGroup
Can any of the company-specific risk be diversified away by investing in both PENN NATL and ManpowerGroup 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 ManpowerGroup 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 ManpowerGroup, you can compare the effects of market volatilities on PENN NATL and ManpowerGroup 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 ManpowerGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and ManpowerGroup.
Diversification Opportunities for PENN NATL and ManpowerGroup
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PENN and ManpowerGroup is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and ManpowerGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ManpowerGroup 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 ManpowerGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ManpowerGroup has no effect on the direction of PENN NATL i.e., PENN NATL and ManpowerGroup go up and down completely randomly.
Pair Corralation between PENN NATL and ManpowerGroup
Assuming the 90 days trading horizon PENN NATL GAMING is expected to generate 1.47 times more return on investment than ManpowerGroup. However, PENN NATL is 1.47 times more volatile than ManpowerGroup. It trades about 0.3 of its potential returns per unit of risk. ManpowerGroup is currently generating about 0.19 per unit of risk. If you would invest 1,772 in PENN NATL GAMING on September 4, 2024 and sell it today you would earn a total of 267.00 from holding PENN NATL GAMING or generate 15.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PENN NATL GAMING vs. ManpowerGroup
Performance |
| Timeline |
| PENN NATL GAMING |
| ManpowerGroup |
PENN NATL and ManpowerGroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN NATL and ManpowerGroup
The main advantage of trading using opposite PENN NATL and ManpowerGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN NATL position performs unexpectedly, ManpowerGroup 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 ManpowerGroup will offset losses from the drop in ManpowerGroup's long position.The idea behind PENN NATL GAMING and ManpowerGroup 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.| ManpowerGroup vs. TROPHY GAMES DEV | ManpowerGroup vs. PENN NATL GAMING | ManpowerGroup vs. Townsquare Media | ManpowerGroup vs. Universal 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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