Correlation Between Gaming Leisure and PotlatchDeltic Corp

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

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

Diversification Opportunities for Gaming Leisure and PotlatchDeltic Corp

0.69

Correlation Coefficient

Gaming Leisure  PotlatchDeltic Corp

Poor diversification

The 3 months correlation between Gaming and PotlatchDeltic is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Leisure Properties and PotlatchDeltic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PotlatchDeltic Corp and Gaming Leisure 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 Gaming Leisure Properties are associated (or correlated) with PotlatchDeltic Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PotlatchDeltic Corp has no effect on the direction of Gaming Leisure i.e., Gaming Leisure and PotlatchDeltic Corp go up and down completely randomly.

Pair Corralation between Gaming Leisure and PotlatchDeltic Corp

Given the investment horizon of 90 days Gaming Leisure Properties is expected to under-perform the PotlatchDeltic Corp. But the stock apears to be less risky and, when comparing its historical volatility, Gaming Leisure Properties is 1.45 times less risky than PotlatchDeltic Corp. The stock trades about -0.02 of its potential returns per unit of risk. The PotlatchDeltic Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,122  in PotlatchDeltic Corp on November 19, 2024 and sell it today you would earn a total of  274.00  from holding PotlatchDeltic Corp or generate 6.65% return on investment over 90 days.

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

Gaming Leisure Properties  vs.  PotlatchDeltic Corp

Gaming Leisure Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gaming Leisure Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Gaming Leisure is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

PotlatchDeltic Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PotlatchDeltic Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental indicators, PotlatchDeltic Corp may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Gaming Leisure and PotlatchDeltic Corp

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

The idea behind Gaming Leisure Properties and PotlatchDeltic Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.