Correlation Between PENN Entertainment and TITAN MACHINERY

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

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

Diversification Opportunities for PENN Entertainment and TITAN MACHINERY

0.79

Correlation Coefficient

PENN Entertainment  TITAN MACHINERY

Poor diversification

The 3 months correlation between PENN and TITAN is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and TITAN MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TITAN MACHINERY 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 TITAN MACHINERY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TITAN MACHINERY has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and TITAN MACHINERY go up and down completely randomly.

Pair Corralation between PENN Entertainment and TITAN MACHINERY

Assuming the 90 days trading horizon PENN Entertainment is expected to generate 7.88 times less return on investment than TITAN MACHINERY. But when comparing it to its historical volatility, PENN Entertainment is 1.39 times less risky than TITAN MACHINERY. It trades about 0.0 of its potential returns per unit of risk. TITAN MACHINERY is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,390  in TITAN MACHINERY on October 4, 2024 and sell it today you would lose (80.00) from holding TITAN MACHINERY or give up 5.76% of portfolio value over 90 days.

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

PENN Entertainment  vs.  TITAN MACHINERY

PENN Entertainment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PENN Entertainment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

TITAN MACHINERY

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TITAN MACHINERY are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, TITAN MACHINERY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PENN Entertainment and TITAN MACHINERY

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

The idea behind PENN Entertainment and TITAN MACHINERY 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.