Correlation Between PENN Entertainment and PotlatchDeltic

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

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

Diversification Opportunities for PENN Entertainment and PotlatchDeltic

0.49

Correlation Coefficient

PENN Entertainment  PotlatchDeltic

Very weak diversification

The 3 months correlation between PENN and PotlatchDeltic is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and PotlatchDeltic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PotlatchDeltic 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 PotlatchDeltic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PotlatchDeltic has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and PotlatchDeltic go up and down completely randomly.

Pair Corralation between PENN Entertainment and PotlatchDeltic

Assuming the 90 days trading horizon PENN Entertainment is expected to generate 2.25 times more return on investment than PotlatchDeltic. However, PENN Entertainment is 2.25 times more volatile than PotlatchDeltic. It trades about -0.03 of its potential returns per unit of risk. PotlatchDeltic is currently generating about -0.29 per unit of risk. If you would invest  1,909  in PENN Entertainment on October 10, 2024 and sell it today you would lose (50.00) from holding PENN Entertainment or give up 2.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

PENN Entertainment  vs.  PotlatchDeltic

PENN Entertainment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, PENN Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

PotlatchDeltic

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PotlatchDeltic are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PotlatchDeltic 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 PotlatchDeltic

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

The idea behind PENN Entertainment and PotlatchDeltic 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.