Correlation Between PENN Entertainment and ZTO EXPRESS
Can any of the company-specific risk be diversified away by investing in both PENN Entertainment and ZTO EXPRESS 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 ZTO EXPRESS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN Entertainment and ZTO EXPRESS, you can compare the effects of market volatilities on PENN Entertainment and ZTO EXPRESS 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 ZTO EXPRESS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment and ZTO EXPRESS.
Diversification Opportunities for PENN Entertainment and ZTO EXPRESS
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PENN and ZTO is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and ZTO EXPRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO EXPRESS 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 ZTO EXPRESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZTO EXPRESS has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and ZTO EXPRESS go up and down completely randomly.
Pair Corralation between PENN Entertainment and ZTO EXPRESS
Assuming the 90 days trading horizon PENN Entertainment is expected to generate 1.88 times more return on investment than ZTO EXPRESS. However, PENN Entertainment is 1.88 times more volatile than ZTO EXPRESS. It trades about 0.17 of its potential returns per unit of risk. ZTO EXPRESS is currently generating about -0.17 per unit of risk. If you would invest 1,760 in PENN Entertainment on October 25, 2024 and sell it today you would earn a total of 165.00 from holding PENN Entertainment or generate 9.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PENN Entertainment vs. ZTO EXPRESS
Performance |
| Timeline |
| PENN Entertainment |
| ZTO EXPRESS |
PENN Entertainment and ZTO EXPRESS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN Entertainment and ZTO EXPRESS
The main advantage of trading using opposite PENN Entertainment and ZTO EXPRESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN Entertainment position performs unexpectedly, ZTO EXPRESS 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 ZTO EXPRESS will offset losses from the drop in ZTO EXPRESS's long position.| PENN Entertainment vs. Apple Inc | PENN Entertainment vs. Apple Inc | PENN Entertainment vs. Apple Inc | PENN Entertainment vs. Apple Inc |
| ZTO EXPRESS vs. PROSIEBENSAT1 MEDIADR4 | ZTO EXPRESS vs. PENN Entertainment | ZTO EXPRESS vs. VIVA WINE GROUP | ZTO EXPRESS vs. Flutter Entertainment PLC |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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