Correlation Between Penn National and ETF Series

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

Diversification Opportunities for Penn National and ETF Series

0.17

Correlation Coefficient

Penn National  ETF Series

Average diversification

The 3 months correlation between Penn and ETF is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Penn National i.e., Penn National and ETF Series go up and down completely randomly.

Pair Corralation between Penn National and ETF Series

Given the investment horizon of 90 days Penn National Gaming is expected to generate 3.04 times more return on investment than ETF Series. However, Penn National is 3.04 times more volatile than ETF Series Solutions. It trades about 0.19 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.37 per unit of risk. If you would invest  1,813  in Penn National Gaming on October 23, 2024 and sell it today you would earn a total of  189.00  from holding Penn National Gaming or generate 10.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	77.78%
Values	Daily Returns

Penn National Gaming  vs.  ETF Series Solutions

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.

ETF Series Solutions

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ETF Series Solutions are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, ETF Series reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penn National and ETF Series

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

The idea behind Penn National Gaming and ETF Series Solutions 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.