Correlation Between PENN Entertainment and Rollins

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

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

Diversification Opportunities for PENN Entertainment and Rollins

-0.74

Correlation Coefficient

PENN Entertainment  Rollins

Pay attention - limited upside

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

Pair Corralation between PENN Entertainment and Rollins

Assuming the 90 days trading horizon PENN Entertainment is expected to generate 2.24 times more return on investment than Rollins. However, PENN Entertainment is 2.24 times more volatile than Rollins. It trades about 0.1 of its potential returns per unit of risk. Rollins is currently generating about -0.02 per unit of risk. If you would invest  1,328  in PENN Entertainment on April 23, 2025 and sell it today you would earn a total of  218.00  from holding PENN Entertainment or generate 16.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

PENN Entertainment  vs.  Rollins

PENN Entertainment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, PENN Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Rollins

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rollins has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Rollins is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PENN Entertainment and Rollins

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

The idea behind PENN Entertainment and Rollins 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.