Correlation Between PENN NATL and Sixt Leasing

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

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

Diversification Opportunities for PENN NATL and Sixt Leasing

-0.74

Correlation Coefficient

PENN NATL  Sixt Leasing

Pay attention - limited upside

The 3 months correlation between PENN and Sixt is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and Sixt Leasing SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt Leasing SE and PENN NATL 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 PENN NATL GAMING are associated (or correlated) with Sixt Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt Leasing SE has no effect on the direction of PENN NATL i.e., PENN NATL and Sixt Leasing go up and down completely randomly.

Pair Corralation between PENN NATL and Sixt Leasing

Assuming the 90 days trading horizon PENN NATL GAMING is expected to generate 1.43 times more return on investment than Sixt Leasing. However, PENN NATL is 1.43 times more volatile than Sixt Leasing SE. It trades about 0.04 of its potential returns per unit of risk. Sixt Leasing SE is currently generating about -0.08 per unit of risk. If you would invest  1,713  in PENN NATL GAMING on September 29, 2024 and sell it today you would earn a total of  68.00  from holding PENN NATL GAMING or generate 3.97% return on investment over 90 days.

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

PENN NATL GAMING  vs.  Sixt Leasing SE

PENN NATL GAMING

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PENN NATL GAMING are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PENN NATL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sixt Leasing SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sixt Leasing SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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 PENN NATL and Sixt Leasing

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

The idea behind PENN NATL GAMING and Sixt Leasing SE 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 Anywhere module to track or share privately all of your investments from the convenience of any device.