Correlation Between Penn National and Jpmorgan Smartretirement

Can any of the company-specific risk be diversified away by investing in both Penn National and Jpmorgan Smartretirement 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 Jpmorgan Smartretirement 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 Jpmorgan Smartretirement 2020, you can compare the effects of market volatilities on Penn National and Jpmorgan Smartretirement 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 Jpmorgan Smartretirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Jpmorgan Smartretirement.

Diversification Opportunities for Penn National and Jpmorgan Smartretirement

0.31

Correlation Coefficient

Penn National  Jpmorgan Smartretirement

Weak diversification

The 3 months correlation between Penn and Jpmorgan is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Jpmorgan Smartretirement 2020 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Smartretirement 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 Jpmorgan Smartretirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Smartretirement has no effect on the direction of Penn National i.e., Penn National and Jpmorgan Smartretirement go up and down completely randomly.

Pair Corralation between Penn National and Jpmorgan Smartretirement

Given the investment horizon of 90 days Penn National Gaming is expected to under-perform the Jpmorgan Smartretirement. In addition to that, Penn National is 6.9 times more volatile than Jpmorgan Smartretirement 2020. It trades about -0.02 of its total potential returns per unit of risk. Jpmorgan Smartretirement 2020 is currently generating about 0.05 per unit of volatility. If you would invest  1,404  in Jpmorgan Smartretirement 2020 on October 8, 2024 and sell it today you would earn a total of  160.00  from holding Jpmorgan Smartretirement 2020 or generate 11.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Penn National Gaming  vs.  Jpmorgan Smartretirement 2020

Penn National Gaming

Risk-Adjusted Performance

1 of 100

Weak

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.

Jpmorgan Smartretirement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jpmorgan Smartretirement 2020 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Jpmorgan Smartretirement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Penn National and Jpmorgan Smartretirement

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

The idea behind Penn National Gaming and Jpmorgan Smartretirement 2020 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.