Correlation Between Ströer SE and Penn National

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

By analyzing existing cross correlation between Strer SE Co and Penn National Gaming, you can compare the effects of market volatilities on Ströer SE and Penn National 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 Ströer SE with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ströer SE and Penn National.

Diversification Opportunities for Ströer SE and Penn National

0.01

Correlation Coefficient

Ströer SE  Penn National

Significant diversification

The 3 months correlation between Ströer and Penn is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Strer SE Co and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National Gaming and Ströer SE 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 Strer SE Co are associated (or correlated) with Penn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of Ströer SE i.e., Ströer SE and Penn National go up and down completely randomly.

Pair Corralation between Ströer SE and Penn National

Assuming the 90 days trading horizon Strer SE Co is expected to generate 0.95 times more return on investment than Penn National. However, Strer SE Co is 1.05 times less risky than Penn National. It trades about 0.13 of its potential returns per unit of risk. Penn National Gaming is currently generating about -0.05 per unit of risk. If you would invest  4,618  in Strer SE Co on December 25, 2024 and sell it today you would earn a total of  1,132  from holding Strer SE Co or generate 24.51% return on investment over 90 days.

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

Strer SE Co  vs.  Penn National Gaming

Ströer SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Strer SE Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ströer SE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Penn National Gaming

Risk-Adjusted Performance

Very Weak

Over the last 90 days Penn National Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Ströer SE and Penn National

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

The idea behind Strer SE Co and Penn National Gaming 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.