Correlation Between PENN Entertainment and VOLKSWAGEN

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

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

Diversification Opportunities for PENN Entertainment and VOLKSWAGEN

-0.4

Correlation Coefficient

PENN Entertainment  VOLKSWAGEN

Very good diversification

The 3 months correlation between PENN and VOLKSWAGEN is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and VOLKSWAGEN AG VZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOLKSWAGEN AG VZ 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 VOLKSWAGEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOLKSWAGEN AG VZ has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and VOLKSWAGEN go up and down completely randomly.

Pair Corralation between PENN Entertainment and VOLKSWAGEN

Assuming the 90 days trading horizon PENN Entertainment is expected to under-perform the VOLKSWAGEN. In addition to that, PENN Entertainment is 1.43 times more volatile than VOLKSWAGEN AG VZ. It trades about -0.05 of its total potential returns per unit of risk. VOLKSWAGEN AG VZ is currently generating about 0.14 per unit of volatility. If you would invest  865.00  in VOLKSWAGEN AG VZ on December 23, 2024 and sell it today you would earn a total of  155.00  from holding VOLKSWAGEN AG VZ or generate 17.92% return on investment over 90 days.

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

PENN Entertainment  vs.  VOLKSWAGEN AG VZ

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.

VOLKSWAGEN AG VZ

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VOLKSWAGEN AG VZ are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, VOLKSWAGEN reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PENN Entertainment and VOLKSWAGEN

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

The idea behind PENN Entertainment and VOLKSWAGEN AG VZ 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.