Correlation Between Penn National and Hilton Grand

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

Diversification Opportunities for Penn National and Hilton Grand

0.76

Correlation Coefficient

Penn National  Hilton Grand

Poor diversification

The 3 months correlation between Penn and Hilton is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Hilton Grand Vacations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Grand Vacations 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 Hilton Grand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Grand Vacations has no effect on the direction of Penn National i.e., Penn National and Hilton Grand go up and down completely randomly.

Pair Corralation between Penn National and Hilton Grand

Given the investment horizon of 90 days Penn National Gaming is expected to under-perform the Hilton Grand. In addition to that, Penn National is 1.52 times more volatile than Hilton Grand Vacations. It trades about -0.02 of its total potential returns per unit of risk. Hilton Grand Vacations is currently generating about 0.0 per unit of volatility. If you would invest  4,418  in Hilton Grand Vacations on October 3, 2024 and sell it today you would lose (523.00) from holding Hilton Grand Vacations or give up 11.84% of portfolio value over 90 days.

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

Penn National Gaming  vs.  Hilton Grand Vacations

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.

Hilton Grand Vacations

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Grand Vacations are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Hilton Grand may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Penn National and Hilton Grand

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

The idea behind Penn National Gaming and Hilton Grand Vacations 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.