Correlation Between PENN Entertainment and WisdomTree Investments
Can any of the company-specific risk be diversified away by investing in both PENN Entertainment and WisdomTree Investments 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 WisdomTree Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN Entertainment and WisdomTree Investments, you can compare the effects of market volatilities on PENN Entertainment and WisdomTree Investments 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 WisdomTree Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment and WisdomTree Investments.
Diversification Opportunities for PENN Entertainment and WisdomTree Investments
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PENN and WisdomTree is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments 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 WisdomTree Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Investments has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and WisdomTree Investments go up and down completely randomly.
Pair Corralation between PENN Entertainment and WisdomTree Investments
Assuming the 90 days trading horizon PENN Entertainment is expected to generate 1.36 times more return on investment than WisdomTree Investments. However, PENN Entertainment is 1.36 times more volatile than WisdomTree Investments. It trades about 0.04 of its potential returns per unit of risk. WisdomTree Investments is currently generating about 0.04 per unit of risk. If you would invest 1,503 in PENN Entertainment on October 12, 2024 and sell it today you would earn a total of 246.00 from holding PENN Entertainment or generate 16.37% 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. WisdomTree Investments
Performance |
| Timeline |
| PENN Entertainment |
| WisdomTree Investments |
PENN Entertainment and WisdomTree Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN Entertainment and WisdomTree Investments
The main advantage of trading using opposite PENN Entertainment and WisdomTree Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN Entertainment position performs unexpectedly, WisdomTree Investments 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 WisdomTree Investments will offset losses from the drop in WisdomTree Investments' long position.| PENN Entertainment vs. PARKEN Sport Entertainment | PENN Entertainment vs. SEI INVESTMENTS | PENN Entertainment vs. Japan Asia Investment | PENN Entertainment vs. WisdomTree Investments |
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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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