Correlation Between Penn National and Utilities Fund

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

Diversification Opportunities for Penn National and Utilities Fund

0.56

Correlation Coefficient

Penn National  Utilities Fund

Very weak diversification

The 3 months correlation between Penn and Utilities is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Utilities Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Fund Investor 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 Utilities Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Fund Investor has no effect on the direction of Penn National i.e., Penn National and Utilities Fund go up and down completely randomly.

Pair Corralation between Penn National and Utilities Fund

Given the investment horizon of 90 days Penn National Gaming is expected to under-perform the Utilities Fund. In addition to that, Penn National is 3.2 times more volatile than Utilities Fund Investor. It trades about -0.02 of its total potential returns per unit of risk. Utilities Fund Investor is currently generating about 0.03 per unit of volatility. If you would invest  5,018  in Utilities Fund Investor on October 23, 2024 and sell it today you would earn a total of  790.00  from holding Utilities Fund Investor or generate 15.74% return on investment over 90 days.

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

Penn National Gaming  vs.  Utilities Fund Investor

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.

Utilities Fund Investor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Utilities Fund Investor has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Utilities Fund 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 Utilities Fund

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

The idea behind Penn National Gaming and Utilities Fund Investor 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.