Correlation Between Penn National and GRENKELEASING Dusseldorf

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

Diversification Opportunities for Penn National and GRENKELEASING Dusseldorf

0.53

Correlation Coefficient

Penn National  GRENKELEASING Dusseldorf

Very weak diversification

The 3 months correlation between Penn and GRENKELEASING is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and GRENKELEASING Dusseldorf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRENKELEASING Dusseldorf 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 GRENKELEASING Dusseldorf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRENKELEASING Dusseldorf has no effect on the direction of Penn National i.e., Penn National and GRENKELEASING Dusseldorf go up and down completely randomly.

Pair Corralation between Penn National and GRENKELEASING Dusseldorf

Given the investment horizon of 90 days Penn National Gaming is expected to generate 1.04 times more return on investment than GRENKELEASING Dusseldorf. However, Penn National is 1.04 times more volatile than GRENKELEASING Dusseldorf. It trades about -0.01 of its potential returns per unit of risk. GRENKELEASING Dusseldorf is currently generating about -0.04 per unit of risk. If you would invest  1,813  in Penn National Gaming on December 24, 2024 and sell it today you would lose (76.00) from holding Penn National Gaming or give up 4.19% of portfolio value over 90 days.

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

Penn National Gaming  vs.  GRENKELEASING Dusseldorf

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 very healthy basic indicators, Penn National is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

GRENKELEASING Dusseldorf

Risk-Adjusted Performance

Very Weak

Over the last 90 days GRENKELEASING Dusseldorf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward-looking indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Penn National and GRENKELEASING Dusseldorf

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

The idea behind Penn National Gaming and GRENKELEASING Dusseldorf 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.