Correlation Between PENN Entertainment and Capgemini

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

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

Diversification Opportunities for PENN Entertainment and Capgemini

0.77

Correlation Coefficient

PENN Entertainment  Capgemini

Poor diversification

The 3 months correlation between PENN and Capgemini is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini 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 Capgemini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capgemini SE has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and Capgemini go up and down completely randomly.

Pair Corralation between PENN Entertainment and Capgemini

Assuming the 90 days trading horizon PENN Entertainment is expected to under-perform the Capgemini. In addition to that, PENN Entertainment is 1.46 times more volatile than Capgemini SE. It trades about -0.07 of its total potential returns per unit of risk. Capgemini SE is currently generating about -0.04 per unit of volatility. If you would invest  15,485  in Capgemini SE on December 21, 2024 and sell it today you would lose (995.00) from holding Capgemini SE or give up 6.43% 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.  Capgemini 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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Capgemini SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capgemini SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Capgemini is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PENN Entertainment and Capgemini

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

The idea behind PENN Entertainment and Capgemini 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..