Correlation Between Penn National and Oklahoma College

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

Diversification Opportunities for Penn National and Oklahoma College

0.42

Correlation Coefficient

Penn National  Oklahoma College

Very weak diversification

The 3 months correlation between Penn and Oklahoma is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Oklahoma College Savings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklahoma College Savings 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 Oklahoma College. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oklahoma College Savings has no effect on the direction of Penn National i.e., Penn National and Oklahoma College go up and down completely randomly.

Pair Corralation between Penn National and Oklahoma College

Given the investment horizon of 90 days Penn National Gaming is expected to under-perform the Oklahoma College. In addition to that, Penn National is 6.18 times more volatile than Oklahoma College Savings. It trades about -0.02 of its total potential returns per unit of risk. Oklahoma College Savings is currently generating about 0.06 per unit of volatility. If you would invest  1,083  in Oklahoma College Savings on October 23, 2024 and sell it today you would earn a total of  175.00  from holding Oklahoma College Savings or generate 16.16% return on investment over 90 days.

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

Penn National Gaming  vs.  Oklahoma College Savings

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.

Oklahoma College Savings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oklahoma College Savings are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Oklahoma College is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Penn National and Oklahoma College

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

The idea behind Penn National Gaming and Oklahoma College Savings 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.