Correlation Between PENN Entertainment and Sanyo Chemical
Can any of the company-specific risk be diversified away by investing in both PENN Entertainment and Sanyo Chemical 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 Sanyo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN Entertainment and Sanyo Chemical Industries, you can compare the effects of market volatilities on PENN Entertainment and Sanyo Chemical 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 Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment and Sanyo Chemical.
Diversification Opportunities for PENN Entertainment and Sanyo Chemical
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PENN and Sanyo is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries 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 Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and Sanyo Chemical go up and down completely randomly.
Pair Corralation between PENN Entertainment and Sanyo Chemical
Assuming the 90 days trading horizon PENN Entertainment is expected to generate 2.61 times more return on investment than Sanyo Chemical. However, PENN Entertainment is 2.61 times more volatile than Sanyo Chemical Industries. It trades about 0.06 of its potential returns per unit of risk. Sanyo Chemical Industries is currently generating about 0.02 per unit of risk. If you would invest 1,684 in PENN Entertainment on November 7, 2024 and sell it today you would earn a total of 313.00 from holding PENN Entertainment or generate 18.59% 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. Sanyo Chemical Industries
Performance |
| Timeline |
| PENN Entertainment |
| Sanyo Chemical Industries |
PENN Entertainment and Sanyo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN Entertainment and Sanyo Chemical
The main advantage of trading using opposite PENN Entertainment and Sanyo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN Entertainment position performs unexpectedly, Sanyo Chemical 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 Sanyo Chemical will offset losses from the drop in Sanyo Chemical'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 |
| Sanyo Chemical vs. DISTRICT METALS | Sanyo Chemical vs. De Grey Mining | Sanyo Chemical vs. Siamgas And Petrochemicals | Sanyo Chemical vs. Calibre Mining 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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