Correlation Between PENN Entertainment and ELEMENT 29

Can any of the company-specific risk be diversified away by investing in both PENN Entertainment and ELEMENT 29 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 ELEMENT 29 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PENN Entertainment and ELEMENT 29 RESOURCES, you can compare the effects of market volatilities on PENN Entertainment and ELEMENT 29 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 ELEMENT 29. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment and ELEMENT 29.

Diversification Opportunities for PENN Entertainment and ELEMENT 29

0.5

Correlation Coefficient

PENN Entertainment  ELEMENT 29

Very weak diversification

The 3 months correlation between PENN and ELEMENT is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and ELEMENT 29 RESOURCES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELEMENT 29 RESOURCES 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 ELEMENT 29. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELEMENT 29 RESOURCES has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and ELEMENT 29 go up and down completely randomly.

Pair Corralation between PENN Entertainment and ELEMENT 29

Assuming the 90 days trading horizon PENN Entertainment is expected to under-perform the ELEMENT 29. But the stock apears to be less risky and, when comparing its historical volatility, PENN Entertainment is 2.33 times less risky than ELEMENT 29. The stock trades about -0.03 of its potential returns per unit of risk. The ELEMENT 29 RESOURCES is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  32.00  in ELEMENT 29 RESOURCES on October 9, 2024 and sell it today you would earn a total of  3.00  from holding ELEMENT 29 RESOURCES or generate 9.38% return on investment over 90 days.

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

PENN Entertainment  vs.  ELEMENT 29 RESOURCES

PENN Entertainment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PENN Entertainment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ELEMENT 29 RESOURCES

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ELEMENT 29 RESOURCES are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ELEMENT 29 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PENN Entertainment and ELEMENT 29

The main advantage of trading using opposite PENN Entertainment and ELEMENT 29 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN Entertainment position performs unexpectedly, ELEMENT 29 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 ELEMENT 29 will offset losses from the drop in ELEMENT 29's long position.

The idea behind PENN Entertainment and ELEMENT 29 RESOURCES 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.