Correlation Between Montana Technologies and Penn National

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

By analyzing existing cross correlation between Montana Technologies and Penn National Gaming, you can compare the effects of market volatilities on Montana Technologies and Penn National 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 Montana Technologies with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montana Technologies and Penn National.

Diversification Opportunities for Montana Technologies and Penn National

0.13

Correlation Coefficient

Montana Technologies  Penn National

Average diversification

The 3 months correlation between Montana and Penn is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Montana Technologies and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National Gaming and Montana Technologies 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 Montana Technologies are associated (or correlated) with Penn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of Montana Technologies i.e., Montana Technologies and Penn National go up and down completely randomly.

Pair Corralation between Montana Technologies and Penn National

Given the investment horizon of 90 days Montana Technologies is expected to generate 1.0 times less return on investment than Penn National. In addition to that, Montana Technologies is 1.94 times more volatile than Penn National Gaming. It trades about 0.02 of its total potential returns per unit of risk. Penn National Gaming is currently generating about 0.04 per unit of volatility. If you would invest  1,670  in Penn National Gaming on October 9, 2024 and sell it today you would earn a total of  230.00  from holding Penn National Gaming or generate 13.77% return on investment over 90 days.

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

Montana Technologies  vs.  Penn National Gaming

Montana Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Montana Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Montana Technologies revealed solid returns over the last few months and may actually be approaching a breakup point.

Penn National Gaming

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Penn National may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Montana Technologies and Penn National

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

The idea behind Montana Technologies and Penn National Gaming 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..