Correlation Between Penn National and Chiles Offshore

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

Diversification Opportunities for Penn National and Chiles Offshore

0.0

Correlation Coefficient

Penn National  Chiles Offshore

Pay attention - limited upside

The 3 months correlation between Penn and Chiles is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Chiles Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiles Offshore 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 Chiles Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiles Offshore has no effect on the direction of Penn National i.e., Penn National and Chiles Offshore go up and down completely randomly.

Pair Corralation between Penn National and Chiles Offshore

If you would invest  1,848  in Penn National Gaming on October 8, 2024 and sell it today you would earn a total of  92.00  from holding Penn National Gaming or generate 4.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Penn National Gaming  vs.  Chiles Offshore

Penn National Gaming

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 3 (%) 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.

Chiles Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chiles Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Chiles Offshore is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Penn National and Chiles Offshore

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

The idea behind Penn National Gaming and Chiles Offshore 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.