Correlation Between PENN Entertainment and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both PENN Entertainment and Morgan Stanley 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 Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN Entertainment and Morgan Stanley, you can compare the effects of market volatilities on PENN Entertainment and Morgan Stanley 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 Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment and Morgan Stanley.
Diversification Opportunities for PENN Entertainment and Morgan Stanley
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PENN and Morgan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley 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 Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and Morgan Stanley go up and down completely randomly.
Pair Corralation between PENN Entertainment and Morgan Stanley
Assuming the 90 days trading horizon PENN Entertainment is expected to under-perform the Morgan Stanley. In addition to that, PENN Entertainment is 1.99 times more volatile than Morgan Stanley. It trades about -0.1 of its total potential returns per unit of risk. Morgan Stanley is currently generating about -0.04 per unit of volatility. If you would invest 12,286 in Morgan Stanley on October 14, 2024 and sell it today you would lose (172.00) from holding Morgan Stanley or give up 1.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PENN Entertainment vs. Morgan Stanley
Performance |
| Timeline |
| PENN Entertainment |
| Morgan Stanley |
PENN Entertainment and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN Entertainment and Morgan Stanley
The main advantage of trading using opposite PENN Entertainment and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN Entertainment position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.| PENN Entertainment vs. Apple Inc | PENN Entertainment vs. Apple Inc | PENN Entertainment vs. Apple Inc | PENN Entertainment vs. Apple Inc |
| Morgan Stanley vs. Astral Foods Limited | Morgan Stanley vs. VIENNA INSURANCE GR | Morgan Stanley vs. Safety Insurance Group | Morgan Stanley vs. National Beverage Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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