Correlation Between PENN Entertainment, and Marfrig Global

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

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

Diversification Opportunities for PENN Entertainment, and Marfrig Global

0.93

Correlation Coefficient

PENN Entertainment,  Marfrig Global

Almost no diversification

The 3 months correlation between PENN and Marfrig is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment, and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods 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 Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of PENN Entertainment, i.e., PENN Entertainment, and Marfrig Global go up and down completely randomly.

Pair Corralation between PENN Entertainment, and Marfrig Global

Assuming the 90 days trading horizon PENN Entertainment, is expected to generate 0.21 times more return on investment than Marfrig Global. However, PENN Entertainment, is 4.74 times less risky than Marfrig Global. It trades about -0.15 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about -0.09 per unit of risk. If you would invest  1,194  in PENN Entertainment, on October 9, 2024 and sell it today you would lose (23.00) from holding PENN Entertainment, or give up 1.93% of portfolio value over 90 days.

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

PENN Entertainment,  vs.  Marfrig Global Foods

PENN Entertainment,

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment, are ranked lower than 10 (%) 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.

Marfrig Global Foods

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Marfrig Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PENN Entertainment, and Marfrig Global

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

The idea behind PENN Entertainment, and Marfrig Global Foods 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.