Correlation Between PENN Entertainment and Air Transport
Can any of the company-specific risk be diversified away by investing in both PENN Entertainment and Air Transport 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 Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN Entertainment and Air Transport Services, you can compare the effects of market volatilities on PENN Entertainment and Air Transport 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 Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment and Air Transport.
Diversification Opportunities for PENN Entertainment and Air Transport
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PENN and Air is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and Air Transport go up and down completely randomly.
Pair Corralation between PENN Entertainment and Air Transport
Assuming the 90 days trading horizon PENN Entertainment is expected to generate 7.23 times more return on investment than Air Transport. However, PENN Entertainment is 7.23 times more volatile than Air Transport Services. It trades about 0.09 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.34 per unit of risk. If you would invest 1,874 in PENN Entertainment on October 19, 2024 and sell it today you would earn a total of 96.00 from holding PENN Entertainment or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
PENN Entertainment vs. Air Transport Services
Performance |
| Timeline |
| PENN Entertainment |
| Air Transport Services |
PENN Entertainment and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN Entertainment and Air Transport
The main advantage of trading using opposite PENN Entertainment and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN Entertainment position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| PENN Entertainment vs. DATAGROUP SE | PENN Entertainment vs. Alliance Data Systems | PENN Entertainment vs. Teradata Corp | PENN Entertainment vs. PKSHA TECHNOLOGY INC |
| Air Transport vs. Semiconductor Manufacturing International | Air Transport vs. Tencent Music Entertainment | Air Transport vs. Townsquare Media | Air Transport vs. PENN 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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