Correlation Between Vail Resorts and PENN Entertainment

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

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

Diversification Opportunities for Vail Resorts and PENN Entertainment

0.19

Correlation Coefficient

Vail Resorts  PENN Entertainment

Average diversification

The 3 months correlation between Vail and PENN is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Vail Resorts and PENN Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment and Vail Resorts 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 Vail Resorts 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 Vail Resorts i.e., Vail Resorts and PENN Entertainment go up and down completely randomly.

Pair Corralation between Vail Resorts and PENN Entertainment

Assuming the 90 days horizon Vail Resorts is expected to under-perform the PENN Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Vail Resorts is 1.27 times less risky than PENN Entertainment. The stock trades about -0.1 of its potential returns per unit of risk. The PENN Entertainment is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,714  in PENN Entertainment on December 20, 2024 and sell it today you would lose (222.00) from holding PENN Entertainment or give up 12.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Vail Resorts  vs.  PENN Entertainment

Vail Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vail Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with Vail Resorts and PENN Entertainment

The main advantage of trading using opposite Vail Resorts and PENN Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vail Resorts 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 Vail Resorts 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .