Correlation Between Penn National and 49456BAV3

Can any of the company-specific risk be diversified away by investing in both Penn National and 49456BAV3 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 49456BAV3 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 KMI 48 01 FEB 33, you can compare the effects of market volatilities on Penn National and 49456BAV3 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 49456BAV3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and 49456BAV3.

Diversification Opportunities for Penn National and 49456BAV3

0.11

Correlation Coefficient

Penn National  49456BAV3

Average diversification

The 3 months correlation between Penn and 49456BAV3 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and KMI 48 01 FEB 33 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMI 48 01 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 49456BAV3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMI 48 01 has no effect on the direction of Penn National i.e., Penn National and 49456BAV3 go up and down completely randomly.

Pair Corralation between Penn National and 49456BAV3

Given the investment horizon of 90 days Penn National Gaming is expected to under-perform the 49456BAV3. In addition to that, Penn National is 2.48 times more volatile than KMI 48 01 FEB 33. It trades about -0.01 of its total potential returns per unit of risk. KMI 48 01 FEB 33 is currently generating about 0.04 per unit of volatility. If you would invest  9,573  in KMI 48 01 FEB 33 on October 7, 2024 and sell it today you would earn a total of  148.00  from holding KMI 48 01 FEB 33 or generate 1.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

Penn National Gaming  vs.  KMI 48 01 FEB 33

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.

KMI 48 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KMI 48 01 FEB 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 49456BAV3 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Penn National and 49456BAV3

The main advantage of trading using opposite Penn National and 49456BAV3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, 49456BAV3 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 49456BAV3 will offset losses from the drop in 49456BAV3's long position.

The idea behind Penn National Gaming and KMI 48 01 FEB 33 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.