Correlation Between PENN Entertainment, and Dell Technologies

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

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

Diversification Opportunities for PENN Entertainment, and Dell Technologies

0.01

Correlation Coefficient

PENN Entertainment,  Dell Technologies

Significant diversification

The 3 months correlation between PENN and Dell is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment, and Dell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dell Technologies 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 Dell Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dell Technologies has no effect on the direction of PENN Entertainment, i.e., PENN Entertainment, and Dell Technologies go up and down completely randomly.

Pair Corralation between PENN Entertainment, and Dell Technologies

Assuming the 90 days trading horizon PENN Entertainment, is expected to generate 7.38 times less return on investment than Dell Technologies. But when comparing it to its historical volatility, PENN Entertainment, is 1.52 times less risky than Dell Technologies. It trades about 0.01 of its potential returns per unit of risk. Dell Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  41,005  in Dell Technologies on October 24, 2024 and sell it today you would earn a total of  24,995  from holding Dell Technologies or generate 60.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

PENN Entertainment,  vs.  Dell Technologies

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.

Dell Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dell Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Dell Technologies 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 Dell Technologies

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

The idea behind PENN Entertainment, and Dell Technologies 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.