Correlation Between PENN Entertainment, and Broadridge Financial

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

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

Diversification Opportunities for PENN Entertainment, and Broadridge Financial

0.43

Correlation Coefficient

PENN Entertainment,  Broadridge Financial

Very weak diversification

The 3 months correlation between PENN and Broadridge is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment, and Broadridge Financial Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadridge Financial 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 Broadridge Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadridge Financial has no effect on the direction of PENN Entertainment, i.e., PENN Entertainment, and Broadridge Financial go up and down completely randomly.

Pair Corralation between PENN Entertainment, and Broadridge Financial

Assuming the 90 days trading horizon PENN Entertainment, is expected to generate 10.03 times more return on investment than Broadridge Financial. However, PENN Entertainment, is 10.03 times more volatile than Broadridge Financial Solutions,. It trades about 0.15 of its potential returns per unit of risk. Broadridge Financial Solutions, is currently generating about 0.13 per unit of risk. If you would invest  1,179  in PENN Entertainment, on December 26, 2024 and sell it today you would earn a total of  46.00  from holding PENN Entertainment, or generate 3.9% return on investment over 90 days.

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

PENN Entertainment,  vs.  Broadridge Financial Solutions

PENN Entertainment,

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment, are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, PENN Entertainment, is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Broadridge Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Broadridge Financial Solutions, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Broadridge Financial 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 Broadridge Financial

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

The idea behind PENN Entertainment, and Broadridge Financial Solutions, 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.