Correlation Between Akamai Technologies, and PENN Entertainment,

Can any of the company-specific risk be diversified away by investing in both Akamai Technologies, and PENN Entertainment, 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 Akamai Technologies, and PENN Entertainment, into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Akamai Technologies, and PENN Entertainment,, you can compare the effects of market volatilities on Akamai Technologies, and PENN Entertainment, 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 Akamai Technologies, with a short position of PENN Entertainment,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akamai Technologies, and PENN Entertainment,.

Diversification Opportunities for Akamai Technologies, and PENN Entertainment,

-0.05

Correlation Coefficient

Akamai Technologies,  PENN Entertainment,

Good diversification

The 3 months correlation between Akamai and PENN is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Akamai Technologies, and PENN Entertainment, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment, and Akamai Technologies, 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 Akamai Technologies, are associated (or correlated) with PENN Entertainment,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN Entertainment, has no effect on the direction of Akamai Technologies, i.e., Akamai Technologies, and PENN Entertainment, go up and down completely randomly.

Pair Corralation between Akamai Technologies, and PENN Entertainment,

Assuming the 90 days trading horizon Akamai Technologies, is expected to under-perform the PENN Entertainment,. But the stock apears to be less risky and, when comparing its historical volatility, Akamai Technologies, is 1.5 times less risky than PENN Entertainment,. The stock trades about -0.02 of its potential returns per unit of risk. The PENN Entertainment, is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,174  in PENN Entertainment, on October 24, 2024 and sell it today you would lose (3.00) from holding PENN Entertainment, or give up 0.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Akamai Technologies,  vs.  PENN Entertainment,

Akamai Technologies,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akamai Technologies, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Akamai Technologies, is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PENN Entertainment,

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, PENN Entertainment, may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Akamai Technologies, and PENN Entertainment,

The main advantage of trading using opposite Akamai Technologies, and PENN Entertainment, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akamai Technologies, position performs unexpectedly, PENN Entertainment, 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 PENN Entertainment, will offset losses from the drop in PENN Entertainment,'s long position.

The idea behind Akamai Technologies, and PENN Entertainment, pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.