Correlation Between Penn National and Bluegreen Vacations

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

Diversification Opportunities for Penn National and Bluegreen Vacations

0.26

Correlation Coefficient

Penn National  Bluegreen Vacations

Modest diversification

The 3 months correlation between Penn and Bluegreen is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Bluegreen Vacations Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluegreen Vacations 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 Bluegreen Vacations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluegreen Vacations has no effect on the direction of Penn National i.e., Penn National and Bluegreen Vacations go up and down completely randomly.

Pair Corralation between Penn National and Bluegreen Vacations

Given the investment horizon of 90 days Penn National Gaming is expected to under-perform the Bluegreen Vacations. In addition to that, Penn National is 1.02 times more volatile than Bluegreen Vacations Holding. It trades about -0.02 of its total potential returns per unit of risk. Bluegreen Vacations Holding is currently generating about 0.08 per unit of volatility. If you would invest  2,744  in Bluegreen Vacations Holding on October 3, 2024 and sell it today you would earn a total of  901.00  from holding Bluegreen Vacations Holding or generate 32.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	26.87%
Values	Daily Returns

Penn National Gaming  vs.  Bluegreen Vacations Holding

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.

Bluegreen Vacations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bluegreen Vacations Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Bluegreen Vacations is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Penn National and Bluegreen Vacations

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

The idea behind Penn National Gaming and Bluegreen Vacations Holding 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.