Correlation Between MOLSON RS and PENN Entertainment

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Can any of the company-specific risk be diversified away by investing in both MOLSON RS 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 MOLSON RS and PENN Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MOLSON RS BEVERAGE and PENN Entertainment, you can compare the effects of market volatilities on MOLSON RS 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 MOLSON RS with a short position of PENN Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOLSON RS and PENN Entertainment.

Diversification Opportunities for MOLSON RS and PENN Entertainment

0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between MOLSON and PENN is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding MOLSON RS BEVERAGE and PENN Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment and MOLSON RS 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 MOLSON RS BEVERAGE 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 MOLSON RS i.e., MOLSON RS and PENN Entertainment go up and down completely randomly.

Pair Corralation between MOLSON RS and PENN Entertainment

Assuming the 90 days trading horizon MOLSON RS is expected to generate 4.98 times less return on investment than PENN Entertainment. But when comparing it to its historical volatility, MOLSON RS BEVERAGE is 2.18 times less risky than PENN Entertainment. It trades about 0.02 of its potential returns per unit of risk. PENN Entertainment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,819  in PENN Entertainment on October 26, 2024 and sell it today you would earn a total of  76.00  from holding PENN Entertainment or generate 4.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

MOLSON RS BEVERAGE  vs.  PENN Entertainment

 Performance 
       Timeline  
MOLSON RS BEVERAGE 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in MOLSON RS BEVERAGE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MOLSON RS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
PENN Entertainment 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PENN Entertainment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

MOLSON RS and PENN Entertainment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MOLSON RS and PENN Entertainment

The main advantage of trading using opposite MOLSON RS and PENN Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOLSON RS 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 MOLSON RS BEVERAGE 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.
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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