Correlation Between Penn National and Ballys Corp

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

Diversification Opportunities for Penn National and Ballys Corp

-0.17

Correlation Coefficient

Penn National  Ballys Corp

Good diversification

The 3 months correlation between Penn and Ballys is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Ballys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballys Corp 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 Ballys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ballys Corp has no effect on the direction of Penn National i.e., Penn National and Ballys Corp go up and down completely randomly.

Pair Corralation between Penn National and Ballys Corp

Given the investment horizon of 90 days Penn National Gaming is expected to generate 0.38 times more return on investment than Ballys Corp. However, Penn National Gaming is 2.65 times less risky than Ballys Corp. It trades about -0.03 of its potential returns per unit of risk. Ballys Corp is currently generating about -0.03 per unit of risk. If you would invest  1,873  in Penn National Gaming on December 28, 2024 and sell it today you would lose (161.00) from holding Penn National Gaming or give up 8.6% of portfolio value over 90 days.

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

Penn National Gaming  vs.  Ballys Corp

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 latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Ballys Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ballys Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Penn National and Ballys Corp

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

The idea behind Penn National Gaming and Ballys Corp 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.