Correlation Between Penn National and UBS IF

Can any of the company-specific risk be diversified away by investing in both Penn National and UBS IF 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 UBS IF 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 UBS IF Eqs, you can compare the effects of market volatilities on Penn National and UBS IF 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 UBS IF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and UBS IF.

Diversification Opportunities for Penn National and UBS IF

0.33

Correlation Coefficient

Penn National  UBS IF

Weak diversification

The 3 months correlation between Penn and UBS is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and UBS IF Eqs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS IF Eqs 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 UBS IF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS IF Eqs has no effect on the direction of Penn National i.e., Penn National and UBS IF go up and down completely randomly.

Pair Corralation between Penn National and UBS IF

Given the investment horizon of 90 days Penn National Gaming is expected to under-perform the UBS IF. In addition to that, Penn National is 2.92 times more volatile than UBS IF Eqs. It trades about -0.08 of its total potential returns per unit of risk. UBS IF Eqs is currently generating about 0.06 per unit of volatility. If you would invest  23,548  in UBS IF Eqs on October 8, 2024 and sell it today you would earn a total of  195.00  from holding UBS IF Eqs or generate 0.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	73.68%
Values	Daily Returns

Penn National Gaming  vs.  UBS IF Eqs

Penn National Gaming

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 1 (%) 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.

UBS IF Eqs

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days UBS IF Eqs has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat unfluctuating basic indicators, UBS IF may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Penn National and UBS IF

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

The idea behind Penn National Gaming and UBS IF Eqs 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.