Correlation Between PENN Entertainment and GBS Software
Can any of the company-specific risk be diversified away by investing in both PENN Entertainment and GBS Software 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 GBS Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN Entertainment and GBS Software AG, you can compare the effects of market volatilities on PENN Entertainment and GBS Software 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 GBS Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment and GBS Software.
Diversification Opportunities for PENN Entertainment and GBS Software
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PENN and GBS is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and GBS Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GBS Software AG 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 GBS Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GBS Software AG has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and GBS Software go up and down completely randomly.
Pair Corralation between PENN Entertainment and GBS Software
Assuming the 90 days trading horizon PENN Entertainment is expected to generate 1.51 times less return on investment than GBS Software. In addition to that, PENN Entertainment is 1.43 times more volatile than GBS Software AG. It trades about 0.11 of its total potential returns per unit of risk. GBS Software AG is currently generating about 0.23 per unit of volatility. If you would invest 276.00 in GBS Software AG on October 29, 2024 and sell it today you would earn a total of 28.00 from holding GBS Software AG or generate 10.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PENN Entertainment vs. GBS Software AG
Performance |
| Timeline |
| PENN Entertainment |
| GBS Software AG |
PENN Entertainment and GBS Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN Entertainment and GBS Software
The main advantage of trading using opposite PENN Entertainment and GBS Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN Entertainment position performs unexpectedly, GBS Software 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 GBS Software will offset losses from the drop in GBS Software's long position.| PENN Entertainment vs. Thai Beverage Public | PENN Entertainment vs. Molson Coors Beverage | PENN Entertainment vs. Perseus Mining Limited | PENN Entertainment vs. MCEWEN MINING INC |
| GBS Software vs. Addus HomeCare | GBS Software vs. Sunny Optical Technology | GBS Software vs. Cognizant Technology Solutions | GBS Software vs. Check Point Software |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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