Correlation Between Penn National and Namibia Critical

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

Diversification Opportunities for Penn National and Namibia Critical

-0.41

Correlation Coefficient

Penn National  Namibia Critical

Very good diversification

The 3 months correlation between Penn and Namibia is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Namibia Critical Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namibia Critical Metals 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 Namibia Critical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namibia Critical Metals has no effect on the direction of Penn National i.e., Penn National and Namibia Critical go up and down completely randomly.

Pair Corralation between Penn National and Namibia Critical

Given the investment horizon of 90 days Penn National is expected to generate 4.91 times less return on investment than Namibia Critical. But when comparing it to its historical volatility, Penn National Gaming is 4.29 times less risky than Namibia Critical. It trades about 0.05 of its potential returns per unit of risk. Namibia Critical Metals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Namibia Critical Metals on October 23, 2024 and sell it today you would earn a total of  0.00  from holding Namibia Critical Metals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Penn National Gaming  vs.  Namibia Critical Metals

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.

Namibia Critical Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Namibia Critical Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Namibia Critical showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penn National and Namibia Critical

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

The idea behind Penn National Gaming and Namibia Critical Metals 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.