Correlation Between PENN Entertainment and ETFS Coffee
Can any of the company-specific risk be diversified away by investing in both PENN Entertainment and ETFS Coffee 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 ETFS Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN Entertainment and ETFS Coffee ETC, you can compare the effects of market volatilities on PENN Entertainment and ETFS Coffee 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 ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment and ETFS Coffee.
Diversification Opportunities for PENN Entertainment and ETFS Coffee
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between PENN and ETFS is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and ETFS Coffee ETC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Coffee ETC 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 ETFS Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Coffee ETC has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and ETFS Coffee go up and down completely randomly.
Pair Corralation between PENN Entertainment and ETFS Coffee
Assuming the 90 days trading horizon PENN Entertainment is expected to generate 1.35 times less return on investment than ETFS Coffee. In addition to that, PENN Entertainment is 1.16 times more volatile than ETFS Coffee ETC. It trades about 0.18 of its total potential returns per unit of risk. ETFS Coffee ETC is currently generating about 0.29 per unit of volatility. If you would invest 5,250 in ETFS Coffee ETC on November 7, 2024 and sell it today you would earn a total of 859.00 from holding ETFS Coffee ETC or generate 16.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PENN Entertainment vs. ETFS Coffee ETC
Performance |
| Timeline |
| PENN Entertainment |
| ETFS Coffee ETC |
PENN Entertainment and ETFS Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN Entertainment and ETFS Coffee
The main advantage of trading using opposite PENN Entertainment and ETFS Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN Entertainment position performs unexpectedly, ETFS Coffee 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 ETFS Coffee will offset losses from the drop in ETFS Coffee's long position.| PENN Entertainment vs. ALTAIR RES INC | PENN Entertainment vs. Penn National Gaming | PENN Entertainment vs. CHINA SOUTHN AIR H | PENN Entertainment vs. RYANAIR HLDGS ADR |
| ETFS Coffee vs. LG Display Co | ETFS Coffee vs. CyberArk Software | ETFS Coffee vs. Playtech plc | ETFS Coffee vs. VITEC SOFTWARE GROUP |
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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