Correlation Between PENN Entertainment and PROSIEBENSAT1 MEDIADR4/

Can any of the company-specific risk be diversified away by investing in both PENN Entertainment and PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PENN Entertainment and PROSIEBENSAT1 MEDIADR4, you can compare the effects of market volatilities on PENN Entertainment and PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment and PROSIEBENSAT1 MEDIADR4/.

Diversification Opportunities for PENN Entertainment and PROSIEBENSAT1 MEDIADR4/

-0.72

Correlation Coefficient

PENN Entertainment  PROSIEBENSAT1 MEDIADR4/

Pay attention - limited upside

The 3 months correlation between PENN and PROSIEBENSAT1 is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and PROSIEBENSAT1 MEDIADR4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROSIEBENSAT1 MEDIADR4/ has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and PROSIEBENSAT1 MEDIADR4/ go up and down completely randomly.

Pair Corralation between PENN Entertainment and PROSIEBENSAT1 MEDIADR4/

Assuming the 90 days trading horizon PENN Entertainment is expected to generate 1.14 times more return on investment than PROSIEBENSAT1 MEDIADR4/. However, PENN Entertainment is 1.14 times more volatile than PROSIEBENSAT1 MEDIADR4. It trades about 0.07 of its potential returns per unit of risk. PROSIEBENSAT1 MEDIADR4 is currently generating about -0.09 per unit of risk. If you would invest  1,709  in PENN Entertainment on October 23, 2024 and sell it today you would earn a total of  193.00  from holding PENN Entertainment or generate 11.29% return on investment over 90 days.

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

PENN Entertainment  vs.  PROSIEBENSAT1 MEDIADR4

PENN Entertainment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment are ranked lower than 5 (%) 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.

PROSIEBENSAT1 MEDIADR4/

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PROSIEBENSAT1 MEDIADR4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PENN Entertainment and PROSIEBENSAT1 MEDIADR4/

The main advantage of trading using opposite PENN Entertainment and PROSIEBENSAT1 MEDIADR4/ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN Entertainment position performs unexpectedly, PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ will offset losses from the drop in PROSIEBENSAT1 MEDIADR4/'s long position.

The idea behind PENN Entertainment and PROSIEBENSAT1 MEDIADR4 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.