Correlation Between Penn National and Genesis Resources

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

Diversification Opportunities for Penn National and Genesis Resources

-0.1

Correlation Coefficient

Penn National  Genesis Resources

Good diversification

The 3 months correlation between Penn and Genesis is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Genesis Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Resources 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 Genesis Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Resources has no effect on the direction of Penn National i.e., Penn National and Genesis Resources go up and down completely randomly.

Pair Corralation between Penn National and Genesis Resources

Given the investment horizon of 90 days Penn National Gaming is expected to generate 0.34 times more return on investment than Genesis Resources. However, Penn National Gaming is 2.93 times less risky than Genesis Resources. It trades about 0.05 of its potential returns per unit of risk. Genesis Resources is currently generating about -0.03 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 Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Penn National Gaming  vs.  Genesis Resources

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.

Genesis Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Penn National and Genesis Resources

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

The idea behind Penn National Gaming and Genesis Resources 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.