Correlation Between VOLKSWAGEN and PENN Entertainment
Can any of the company-specific risk be diversified away by investing in both VOLKSWAGEN 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 VOLKSWAGEN and PENN Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VOLKSWAGEN AG VZ and PENN Entertainment, you can compare the effects of market volatilities on VOLKSWAGEN 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 VOLKSWAGEN with a short position of PENN Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of VOLKSWAGEN and PENN Entertainment.
Diversification Opportunities for VOLKSWAGEN and PENN Entertainment
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between VOLKSWAGEN and PENN is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding VOLKSWAGEN AG VZ and PENN Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment and VOLKSWAGEN 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 VOLKSWAGEN AG VZ 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 VOLKSWAGEN i.e., VOLKSWAGEN and PENN Entertainment go up and down completely randomly.
Pair Corralation between VOLKSWAGEN and PENN Entertainment
Assuming the 90 days trading horizon VOLKSWAGEN AG VZ is expected to under-perform the PENN Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, VOLKSWAGEN AG VZ is 2.04 times less risky than PENN Entertainment. The stock trades about -0.05 of its potential returns per unit of risk. The PENN Entertainment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,679 in PENN Entertainment on October 8, 2024 and sell it today you would earn a total of 113.00 from holding PENN Entertainment or generate 6.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
VOLKSWAGEN AG VZ vs. PENN Entertainment
Performance |
Timeline |
VOLKSWAGEN AG VZ |
PENN Entertainment |
VOLKSWAGEN and PENN Entertainment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with VOLKSWAGEN and PENN Entertainment
The main advantage of trading using opposite VOLKSWAGEN and PENN Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VOLKSWAGEN 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.VOLKSWAGEN vs. Schnitzer Steel Industries | VOLKSWAGEN vs. PENN Entertainment | VOLKSWAGEN vs. Dave Busters Entertainment | VOLKSWAGEN vs. Nippon Steel |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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