Correlation Between Southern Copper and PENN NATL

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

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

Diversification Opportunities for Southern Copper and PENN NATL

-0.57

Correlation Coefficient

Southern Copper  PENN NATL

Excellent diversification

The 3 months correlation between Southern and PENN is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper 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 Southern Copper 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 Southern Copper 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 Southern Copper i.e., Southern Copper and PENN NATL go up and down completely randomly.

Pair Corralation between Southern Copper and PENN NATL

Assuming the 90 days horizon Southern Copper is expected to generate 0.74 times more return on investment than PENN NATL. However, Southern Copper is 1.35 times less risky than PENN NATL. It trades about -0.14 of its potential returns per unit of risk. PENN NATL GAMING is currently generating about -0.11 per unit of risk. If you would invest  9,594  in Southern Copper on September 22, 2024 and sell it today you would lose (690.00) from holding Southern Copper or give up 7.19% of portfolio value over 90 days.

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

Southern Copper  vs.  PENN NATL GAMING

Southern Copper

Risk-Adjusted Performance

0 of 100

Very Weak

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

PENN NATL GAMING

Risk-Adjusted Performance

0 of 100

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 rather sound basic indicators, PENN NATL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Southern Copper and PENN NATL

The main advantage of trading using opposite Southern Copper and PENN NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper 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 Southern Copper 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.