Correlation Between PENN Entertainment, and APA

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

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

Diversification Opportunities for PENN Entertainment, and APA

-0.51

Correlation Coefficient

PENN Entertainment,  APA

Excellent diversification

The 3 months correlation between PENN and APA is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment, and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation 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 APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of PENN Entertainment, i.e., PENN Entertainment, and APA go up and down completely randomly.

Pair Corralation between PENN Entertainment, and APA

Assuming the 90 days trading horizon PENN Entertainment, is expected to generate 0.83 times more return on investment than APA. However, PENN Entertainment, is 1.2 times less risky than APA. It trades about -0.01 of its potential returns per unit of risk. APA Corporation is currently generating about -0.02 per unit of risk. If you would invest  1,630  in PENN Entertainment, on October 4, 2024 and sell it today you would lose (451.00) from holding PENN Entertainment, or give up 27.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	72.51%
Values	Daily Returns

PENN Entertainment,  vs.  APA Corp.

PENN Entertainment,

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment, are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, PENN Entertainment, sustained solid returns over the last few months and may actually be approaching a breakup point.

APA Corporation

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in APA Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, APA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PENN Entertainment, and APA

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

The idea behind PENN Entertainment, and APA Corporation 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.