Correlation Between Penn National and State Street

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

Diversification Opportunities for Penn National and State Street

0.0

Correlation Coefficient

Penn National  State Street

Pay attention - limited upside

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

Pair Corralation between Penn National and State Street

If you would invest (100.00) in State Street on October 8, 2024 and sell it today you would earn a total of  100.00  from holding State Street or generate -100.0% 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.  State Street

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.

State Street

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days State Street has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, State Street is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Penn National and State Street

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

The idea behind Penn National Gaming and State Street 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 Commodity Directory module to find actively traded commodities issued by global exchanges.