Correlation Between NTG Nordic and PENN NATL

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

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

Diversification Opportunities for NTG Nordic and PENN NATL

-0.77

Correlation Coefficient

NTG Nordic  PENN NATL

Pay attention - limited upside

The 3 months correlation between NTG and PENN is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and PENN NATL GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN NATL GAMING and NTG Nordic 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 NTG Nordic Transport are associated (or correlated) with PENN NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN NATL GAMING has no effect on the direction of NTG Nordic i.e., NTG Nordic and PENN NATL go up and down completely randomly.

Pair Corralation between NTG Nordic and PENN NATL

Assuming the 90 days trading horizon NTG Nordic Transport is expected to generate 0.63 times more return on investment than PENN NATL. However, NTG Nordic Transport is 1.59 times less risky than PENN NATL. It trades about 0.07 of its potential returns per unit of risk. PENN NATL GAMING is currently generating about -0.04 per unit of risk. If you would invest  3,435  in NTG Nordic Transport on December 28, 2024 and sell it today you would earn a total of  245.00  from holding NTG Nordic Transport or generate 7.13% return on investment over 90 days.

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

NTG Nordic Transport  vs.  PENN NATL GAMING

NTG Nordic Transport

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NTG Nordic Transport are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NTG Nordic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PENN NATL GAMING

Risk-Adjusted Performance

Very Weak

Over the last 90 days PENN NATL GAMING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with NTG Nordic and PENN NATL

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

The idea behind NTG Nordic Transport and PENN NATL 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.