Correlation Between Penn National and Strer SE

Can any of the company-specific risk be diversified away by investing in both Penn National and Strer SE 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 Strer SE 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 Strer SE Co, you can compare the effects of market volatilities on Penn National and Strer SE 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 Strer SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Strer SE.

Diversification Opportunities for Penn National and Strer SE

-0.69

Correlation Coefficient

Penn National  Strer SE

Excellent diversification

The 3 months correlation between Penn and Strer is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Strer SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strer SE 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 Strer SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strer SE has no effect on the direction of Penn National i.e., Penn National and Strer SE go up and down completely randomly.

Pair Corralation between Penn National and Strer SE

Assuming the 90 days horizon Penn National Gaming is expected to generate 2.54 times more return on investment than Strer SE. However, Penn National is 2.54 times more volatile than Strer SE Co. It trades about 0.0 of its potential returns per unit of risk. Strer SE Co is currently generating about -0.02 per unit of risk. If you would invest  2,206  in Penn National Gaming on October 6, 2024 and sell it today you would lose (298.00) from holding Penn National Gaming or give up 13.51% of portfolio value over 90 days.

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

Penn National Gaming  vs.  Strer SE Co

Penn National Gaming

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Penn National reported solid returns over the last few months and may actually be approaching a breakup point.

Strer SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strer SE Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Penn National and Strer SE

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

The idea behind Penn National Gaming and Strer SE Co 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.