Correlation Between PENN Entertainment, and PulteGroup,

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

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

Diversification Opportunities for PENN Entertainment, and PulteGroup,

-0.32

Correlation Coefficient

PENN Entertainment,  PulteGroup,

Very good diversification

The 3 months correlation between PENN and PulteGroup, is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment, and PulteGroup, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PulteGroup, 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 PulteGroup,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PulteGroup, has no effect on the direction of PENN Entertainment, i.e., PENN Entertainment, and PulteGroup, go up and down completely randomly.

Pair Corralation between PENN Entertainment, and PulteGroup,

Assuming the 90 days trading horizon PENN Entertainment, is expected to generate 0.46 times more return on investment than PulteGroup,. However, PENN Entertainment, is 2.18 times less risky than PulteGroup,. It trades about -0.1 of its potential returns per unit of risk. PulteGroup, is currently generating about -0.23 per unit of risk. If you would invest  1,194  in PENN Entertainment, on October 6, 2024 and sell it today you would lose (15.00) from holding PENN Entertainment, or give up 1.26% of portfolio value over 90 days.

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

PENN Entertainment,  vs.  PulteGroup,

PENN Entertainment,

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment, are ranked lower than 12 (%) 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.

PulteGroup,

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind PENN Entertainment, and PulteGroup, 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.