Correlation Between PENN Entertainment and Airbus SE

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

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

Diversification Opportunities for PENN Entertainment and Airbus SE

0.14

Correlation Coefficient

PENN Entertainment  Airbus SE

Average diversification

The 3 months correlation between PENN and Airbus is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and Airbus SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus SE 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 Airbus SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus SE has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and Airbus SE go up and down completely randomly.

Pair Corralation between PENN Entertainment and Airbus SE

Assuming the 90 days trading horizon PENN Entertainment is expected to under-perform the Airbus SE. In addition to that, PENN Entertainment is 1.69 times more volatile than Airbus SE. It trades about -0.05 of its total potential returns per unit of risk. Airbus SE is currently generating about 0.08 per unit of volatility. If you would invest  15,386  in Airbus SE on December 23, 2024 and sell it today you would earn a total of  1,282  from holding Airbus SE or generate 8.33% return on investment over 90 days.

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

PENN Entertainment  vs.  Airbus SE

PENN Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days PENN Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Airbus SE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Airbus SE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PENN Entertainment and Airbus SE

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

The idea behind PENN Entertainment and Airbus SE 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.