Correlation Between PENN Entertainment and T-MOBILE

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

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

Diversification Opportunities for PENN Entertainment and T-MOBILE

0.89

Correlation Coefficient

PENN Entertainment  T-MOBILE

Very poor diversification

The 3 months correlation between PENN and T-MOBILE is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and T MOBILE US in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T MOBILE US 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 T-MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T MOBILE US has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and T-MOBILE go up and down completely randomly.

Pair Corralation between PENN Entertainment and T-MOBILE

Assuming the 90 days trading horizon PENN Entertainment is expected to generate 1.16 times less return on investment than T-MOBILE. In addition to that, PENN Entertainment is 1.77 times more volatile than T MOBILE US. It trades about 0.05 of its total potential returns per unit of risk. T MOBILE US is currently generating about 0.11 per unit of volatility. If you would invest  19,245  in T MOBILE US on October 8, 2024 and sell it today you would earn a total of  2,030  from holding T MOBILE US or generate 10.55% return on investment over 90 days.

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

PENN Entertainment  vs.  T MOBILE US

PENN Entertainment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PENN Entertainment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

T MOBILE US

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE US are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, T-MOBILE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PENN Entertainment and T-MOBILE

The main advantage of trading using opposite PENN Entertainment and T-MOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN Entertainment position performs unexpectedly, T-MOBILE 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 T-MOBILE will offset losses from the drop in T-MOBILE's long position.

The idea behind PENN Entertainment and T MOBILE US 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.