Correlation Between Entravision Communications and Penn National

Can any of the company-specific risk be diversified away by investing in both Entravision Communications and Penn National 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 Entravision Communications and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Entravision Communications and Penn National Gaming, you can compare the effects of market volatilities on Entravision Communications and Penn National 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 Entravision Communications with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and Penn National.

Diversification Opportunities for Entravision Communications and Penn National

0.39

Correlation Coefficient

Entravision Communications  Penn National

Weak diversification

The 3 months correlation between Entravision and Penn is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National Gaming and Entravision Communications 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 Entravision Communications are associated (or correlated) with Penn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of Entravision Communications i.e., Entravision Communications and Penn National go up and down completely randomly.

Pair Corralation between Entravision Communications and Penn National

Considering the 90-day investment horizon Entravision Communications is expected to under-perform the Penn National. In addition to that, Entravision Communications is 1.2 times more volatile than Penn National Gaming. It trades about -0.02 of its total potential returns per unit of risk. Penn National Gaming is currently generating about -0.02 per unit of volatility. If you would invest  3,285  in Penn National Gaming on October 11, 2024 and sell it today you would lose (1,456) from holding Penn National Gaming or give up 44.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Entravision Communications  vs.  Penn National Gaming

Entravision Communications

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Entravision Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Penn National Gaming

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Penn National Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Penn National is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Entravision Communications and Penn National

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

The idea behind Entravision Communications and Penn National Gaming 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.