Correlation Between Penn National and Amundi Convictions

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

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

Diversification Opportunities for Penn National and Amundi Convictions

0.48

Correlation Coefficient

Penn National  Amundi Convictions

Very weak diversification

The 3 months correlation between Penn and Amundi is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Amundi Convictions ESR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Convictions ESR and Penn National 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 Penn National Gaming are associated (or correlated) with Amundi Convictions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Convictions ESR has no effect on the direction of Penn National i.e., Penn National and Amundi Convictions go up and down completely randomly.

Pair Corralation between Penn National and Amundi Convictions

Given the investment horizon of 90 days Penn National Gaming is expected to under-perform the Amundi Convictions. In addition to that, Penn National is 5.37 times more volatile than Amundi Convictions ESR. It trades about -0.01 of its total potential returns per unit of risk. Amundi Convictions ESR is currently generating about -0.04 per unit of volatility. If you would invest  19,375  in Amundi Convictions ESR on December 23, 2024 and sell it today you would lose (236.00) from holding Amundi Convictions ESR or give up 1.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.8%
Values	Daily Returns

Penn National Gaming  vs.  Amundi Convictions ESR

Penn National Gaming

Risk-Adjusted Performance

Very Weak

Over the last 90 days Penn National Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Amundi Convictions ESR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amundi Convictions ESR has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Amundi Convictions is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Penn National and Amundi Convictions

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

The idea behind Penn National Gaming and Amundi Convictions ESR 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 Transaction History module to view history of all your transactions and understand their impact on performance.