Correlation Between PENN Entertainment and Fomento Econmico
Can any of the company-specific risk be diversified away by investing in both PENN Entertainment and Fomento Econmico 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 Fomento Econmico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN Entertainment and Fomento Econmico Mexicano, you can compare the effects of market volatilities on PENN Entertainment and Fomento Econmico 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 Fomento Econmico. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment and Fomento Econmico.
Diversification Opportunities for PENN Entertainment and Fomento Econmico
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PENN and Fomento is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and Fomento Econmico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Econmico Mexicano 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 Fomento Econmico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Econmico Mexicano has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and Fomento Econmico go up and down completely randomly.
Pair Corralation between PENN Entertainment and Fomento Econmico
Assuming the 90 days trading horizon PENN Entertainment is expected to under-perform the Fomento Econmico. In addition to that, PENN Entertainment is 1.71 times more volatile than Fomento Econmico Mexicano. It trades about -0.07 of its total potential returns per unit of risk. Fomento Econmico Mexicano is currently generating about -0.09 per unit of volatility. If you would invest 8,400 in Fomento Econmico Mexicano on October 12, 2024 and sell it today you would lose (250.00) from holding Fomento Econmico Mexicano or give up 2.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
PENN Entertainment vs. Fomento Econmico Mexicano
Performance |
| Timeline |
| PENN Entertainment |
| Fomento Econmico Mexicano |
PENN Entertainment and Fomento Econmico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN Entertainment and Fomento Econmico
The main advantage of trading using opposite PENN Entertainment and Fomento Econmico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN Entertainment position performs unexpectedly, Fomento Econmico 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 Fomento Econmico will offset losses from the drop in Fomento Econmico's long position.| PENN Entertainment vs. Ross Stores | PENN Entertainment vs. Costco Wholesale Corp | PENN Entertainment vs. H2O Retailing | PENN Entertainment vs. Yuexiu Transport Infrastructure |
| Fomento Econmico vs. Sanyo Chemical Industries | Fomento Econmico vs. PENN Entertainment | Fomento Econmico vs. Suntory Beverage Food | Fomento Econmico vs. TOWNSQUARE MEDIA 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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