Correlation Between Penn Entertainment and Uber Technologies

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Penn Entertainment and Uber Technologies 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 Entertainment and Uber Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penn Entertainment and Uber Technologies, you can compare the effects of market volatilities on Penn Entertainment and Uber Technologies 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 Entertainment with a short position of Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn Entertainment and Uber Technologies.

Diversification Opportunities for Penn Entertainment and Uber Technologies

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Penn Entertainment and Uber Technologies is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Penn Entertainment and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies and Penn Entertainment 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 Entertainment are associated (or correlated) with Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Penn Entertainment i.e., Penn Entertainment and Uber Technologies go up and down completely randomly.

Pair Corralation between Penn Entertainment and Uber Technologies

Given the investment horizon of 90 days Penn Entertainment is expected to generate 1.33 times less return on investment than Uber Technologies. But when comparing it to its historical volatility, Penn Entertainment is 1.22 times less risky than Uber Technologies. It trades about 0.18 of its potential returns per unit of risk. Uber Technologies is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,176  in Uber Technologies on May 20, 2022 and sell it today you would earn a total of  839.00  from holding Uber Technologies or generate 38.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Penn Entertainment  vs.  Uber Technologies

 Performance (%) 
       Timeline  
Penn Entertainment 
Penn Entertainment Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Penn Entertainment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Penn Entertainment disclosed solid returns over the last few months and may actually be approaching a breakup point.

Penn Entertainment Price Channel

Uber Technologies 
Uber Technologies Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Uber Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Uber Technologies Price Channel

Penn Entertainment and Uber Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Penn Entertainment and Uber Technologies

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

Uber Technologies

Pair trading matchups for Uber Technologies

Global Clean vs. Uber Technologies
SP 500 vs. Uber Technologies
Walker Dunlop vs. Uber Technologies
Ford vs. Uber Technologies
Alps Clean vs. Uber Technologies
Visa vs. Uber Technologies
JP Morgan vs. Uber Technologies
Schwab US vs. Uber Technologies
Salesforce vs. Uber Technologies
Vmware vs. Uber Technologies
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Uber Technologies as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Uber Technologies' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Uber Technologies' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Uber Technologies.
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

Other Complementary Tools

Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Fund Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Piotroski F Score
Get Piotroski F Score based on binary analysis strategy of nine different fundamentals
Go
CEO Directory
Screen CEOs from public companies around the world
Go
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Transaction History
View history of all your transactions and understand their impact on performance
Go
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Go