Correlation Between Penn National and Twenty Four

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

Diversification Opportunities for Penn National and Twenty Four

0.05

Correlation Coefficient

Penn National  Twenty Four

Significant diversification

The 3 months correlation between Penn and Twenty is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Twenty Four Con Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twenty Four Con 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 Twenty Four. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twenty Four Con has no effect on the direction of Penn National i.e., Penn National and Twenty Four go up and down completely randomly.

Pair Corralation between Penn National and Twenty Four

Given the investment horizon of 90 days Penn National Gaming is expected to generate 1.11 times more return on investment than Twenty Four. However, Penn National is 1.11 times more volatile than Twenty Four Con Supply. It trades about 0.05 of its potential returns per unit of risk. Twenty Four Con Supply is currently generating about -0.16 per unit of risk. If you would invest  1,862  in Penn National Gaming on October 23, 2024 and sell it today you would earn a total of  140.00  from holding Penn National Gaming or generate 7.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Penn National Gaming  vs.  Twenty Four Con Supply

Penn National Gaming

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Penn National may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Twenty Four Con

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Twenty Four Con Supply has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Penn National and Twenty Four

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

The idea behind Penn National Gaming and Twenty Four Con Supply 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.