Correlation Between TAL Education and PENN Entertainment,

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

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

Diversification Opportunities for TAL Education and PENN Entertainment,

0.77

Correlation Coefficient

TAL Education  PENN Entertainment,

Poor diversification

The 3 months correlation between TAL and PENN is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and PENN Entertainment, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment, and TAL Education 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 TAL Education Group 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 TAL Education i.e., TAL Education and PENN Entertainment, go up and down completely randomly.

Pair Corralation between TAL Education and PENN Entertainment,

Assuming the 90 days trading horizon TAL Education Group is expected to generate 12.53 times more return on investment than PENN Entertainment,. However, TAL Education is 12.53 times more volatile than PENN Entertainment,. It trades about 0.09 of its potential returns per unit of risk. PENN Entertainment, is currently generating about 0.15 per unit of risk. If you would invest  616.00  in TAL Education Group on December 22, 2024 and sell it today you would earn a total of  139.00  from holding TAL Education Group or generate 22.56% return on investment over 90 days.

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

TAL Education Group  vs.  PENN Entertainment,

TAL Education Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TAL Education Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TAL Education sustained solid returns over the last few months and may actually be approaching a breakup point.

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 TAL Education and PENN Entertainment,

The main advantage of trading using opposite TAL Education and PENN Entertainment, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education 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 TAL Education Group 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.

Check out your portfolio center.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.