Correlation Between PENN NATL and Globex Mining

Can any of the company-specific risk be diversified away by investing in both PENN NATL and Globex Mining 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 NATL and Globex Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PENN NATL GAMING and Globex Mining Enterprises, you can compare the effects of market volatilities on PENN NATL and Globex Mining 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 NATL with a short position of Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and Globex Mining.

Diversification Opportunities for PENN NATL and Globex Mining

0.37

Correlation Coefficient

PENN NATL  Globex Mining

Weak diversification

The 3 months correlation between PENN and Globex is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises and PENN NATL 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 NATL GAMING are associated (or correlated) with Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of PENN NATL i.e., PENN NATL and Globex Mining go up and down completely randomly.

Pair Corralation between PENN NATL and Globex Mining

Assuming the 90 days trading horizon PENN NATL GAMING is expected to under-perform the Globex Mining. In addition to that, PENN NATL is 1.22 times more volatile than Globex Mining Enterprises. It trades about -0.03 of its total potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.2 per unit of volatility. If you would invest  76.00  in Globex Mining Enterprises on December 20, 2024 and sell it today you would earn a total of  24.00  from holding Globex Mining Enterprises or generate 31.58% return on investment over 90 days.

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

PENN NATL GAMING  vs.  Globex Mining Enterprises

PENN NATL GAMING

Risk-Adjusted Performance

Very Weak

Over the last 90 days PENN NATL GAMING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Globex Mining Enterprises

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Globex Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PENN NATL and Globex Mining

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

The idea behind PENN NATL GAMING and Globex Mining Enterprises 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.