Correlation Between PENN Entertainment, and Phillips

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

By analyzing existing cross correlation between PENN Entertainment, and Phillips 66, you can compare the effects of market volatilities on PENN Entertainment, and Phillips 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 Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment, and Phillips.

Diversification Opportunities for PENN Entertainment, and Phillips

0.31

Correlation Coefficient

PENN Entertainment,  Phillips

Weak diversification

The 3 months correlation between PENN and Phillips is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment, and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 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 Phillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 has no effect on the direction of PENN Entertainment, i.e., PENN Entertainment, and Phillips go up and down completely randomly.

Pair Corralation between PENN Entertainment, and Phillips

Assuming the 90 days trading horizon PENN Entertainment, is expected to generate 9.62 times less return on investment than Phillips. In addition to that, PENN Entertainment, is 1.22 times more volatile than Phillips 66. It trades about 0.01 of its total potential returns per unit of risk. Phillips 66 is currently generating about 0.09 per unit of volatility. If you would invest  23,708  in Phillips 66 on October 4, 2024 and sell it today you would earn a total of  10,360  from holding Phillips 66 or generate 43.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	56.1%
Values	Daily Returns

PENN Entertainment,  vs.  Phillips 66

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.

Phillips 66

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phillips 66 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with PENN Entertainment, and Phillips

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

The idea behind PENN Entertainment, and Phillips 66 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.