Correlation Between Envista Holdings and Penn National

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

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

Diversification Opportunities for Envista Holdings and Penn National

0.71

Correlation Coefficient

Envista Holdings  Penn National

Poor diversification

The 3 months correlation between Envista and Penn is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Envista Holdings Corp 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 Envista Holdings 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 Envista Holdings Corp 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 Envista Holdings i.e., Envista Holdings and Penn National go up and down completely randomly.

Pair Corralation between Envista Holdings and Penn National

Given the investment horizon of 90 days Envista Holdings Corp is expected to generate 0.65 times more return on investment than Penn National. However, Envista Holdings Corp is 1.53 times less risky than Penn National. It trades about -0.05 of its potential returns per unit of risk. Penn National Gaming is currently generating about -0.05 per unit of risk. If you would invest  2,001  in Envista Holdings Corp on October 10, 2024 and sell it today you would lose (52.00) from holding Envista Holdings Corp or give up 2.6% of portfolio value over 90 days.

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

Envista Holdings Corp  vs.  Penn National Gaming

Envista Holdings Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Envista Holdings Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Envista Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Penn National Gaming

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Penn National is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Envista Holdings and Penn National

The main advantage of trading using opposite Envista Holdings and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Envista Holdings 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 Envista Holdings Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.