Correlation Between Penn National and WPP -

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

By analyzing existing cross correlation between Penn National Gaming and WPP Dusseldorf, you can compare the effects of market volatilities on Penn National and WPP - 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 National with a short position of WPP -. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and WPP -.

Diversification Opportunities for Penn National and WPP -

0.42

Correlation Coefficient

Penn National  WPP -

Very weak diversification

The 3 months correlation between Penn and WPP is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and WPP Dusseldorf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP Dusseldorf and Penn National 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 National Gaming are associated (or correlated) with WPP -. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPP Dusseldorf has no effect on the direction of Penn National i.e., Penn National and WPP - go up and down completely randomly.

Pair Corralation between Penn National and WPP -

Given the investment horizon of 90 days Penn National is expected to generate 2.48 times less return on investment than WPP -. In addition to that, Penn National is 1.84 times more volatile than WPP Dusseldorf. It trades about 0.02 of its total potential returns per unit of risk. WPP Dusseldorf is currently generating about 0.1 per unit of volatility. If you would invest  895.00  in WPP Dusseldorf on October 8, 2024 and sell it today you would earn a total of  80.00  from holding WPP Dusseldorf or generate 8.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Penn National Gaming  vs.  WPP Dusseldorf

Penn National Gaming

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Penn National is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

WPP Dusseldorf

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WPP Dusseldorf are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, WPP - may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Penn National and WPP -

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

The idea behind Penn National Gaming and WPP Dusseldorf 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.