Correlation Between Raytheon Technologies and PENN Entertainment,

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

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

Diversification Opportunities for Raytheon Technologies and PENN Entertainment,

0.39

Correlation Coefficient

Raytheon Technologies  PENN Entertainment,

Weak diversification

The 3 months correlation between Raytheon and PENN is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies and PENN Entertainment, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment, and Raytheon Technologies 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 Raytheon Technologies are associated (or correlated) with PENN Entertainment,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN Entertainment, has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and PENN Entertainment, go up and down completely randomly.

Pair Corralation between Raytheon Technologies and PENN Entertainment,

Assuming the 90 days trading horizon Raytheon Technologies is expected to generate 3.34 times more return on investment than PENN Entertainment,. However, Raytheon Technologies is 3.34 times more volatile than PENN Entertainment,. It trades about 0.07 of its potential returns per unit of risk. PENN Entertainment, is currently generating about 0.15 per unit of risk. If you would invest  12,014  in Raytheon Technologies on December 24, 2024 and sell it today you would earn a total of  666.00  from holding Raytheon Technologies or generate 5.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Raytheon Technologies  vs.  PENN Entertainment,

Raytheon Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Raytheon Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Raytheon Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PENN Entertainment,

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment, are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, PENN Entertainment, is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Raytheon Technologies and PENN Entertainment,

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

The idea behind Raytheon Technologies and PENN Entertainment, 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.