Correlation Between Penn National and Priorityome Fund

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

Diversification Opportunities for Penn National and Priorityome Fund

0.08

Correlation Coefficient

Penn National  Priorityome Fund

Significant diversification

The 3 months correlation between Penn and Priorityome is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Priorityome Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Priorityome Fund 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 Priorityome Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Priorityome Fund has no effect on the direction of Penn National i.e., Penn National and Priorityome Fund go up and down completely randomly.

Pair Corralation between Penn National and Priorityome Fund

Given the investment horizon of 90 days Penn National Gaming is expected to under-perform the Priorityome Fund. But the stock apears to be less risky and, when comparing its historical volatility, Penn National Gaming is 1.1 times less risky than Priorityome Fund. The stock trades about -0.02 of its potential returns per unit of risk. The Priorityome Fund is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,981  in Priorityome Fund on October 7, 2024 and sell it today you would earn a total of  458.00  from holding Priorityome Fund or generate 23.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Penn National Gaming  vs.  Priorityome Fund

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.

Priorityome Fund

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Priorityome Fund are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Priorityome Fund is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Penn National and Priorityome Fund

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

The idea behind Penn National Gaming and Priorityome Fund 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.