Correlation Between Penn National and Ivy Natural

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

Diversification Opportunities for Penn National and Ivy Natural

0.43

Correlation Coefficient

Penn National  Ivy Natural

Very weak diversification

The 3 months correlation between Penn and Ivy is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Ivy Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Natural 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 Ivy Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Natural Resources has no effect on the direction of Penn National i.e., Penn National and Ivy Natural go up and down completely randomly.

Pair Corralation between Penn National and Ivy Natural

Given the investment horizon of 90 days Penn National Gaming is expected to generate 1.9 times more return on investment than Ivy Natural. However, Penn National is 1.9 times more volatile than Ivy Natural Resources. It trades about 0.0 of its potential returns per unit of risk. Ivy Natural Resources is currently generating about -0.28 per unit of risk. If you would invest  1,986  in Penn National Gaming on October 8, 2024 and sell it today you would lose (19.00) from holding Penn National Gaming or give up 0.96% 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.  Ivy Natural Resources

Penn National Gaming

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Ivy Natural Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ivy Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Penn National and Ivy Natural

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

The idea behind Penn National Gaming and Ivy Natural 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.