Correlation Between Penn National and ARDAGH METAL

Can any of the company-specific risk be diversified away by investing in both Penn National and ARDAGH METAL 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 ARDAGH METAL 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 ARDAGH METAL PACDL 0001, you can compare the effects of market volatilities on Penn National and ARDAGH METAL 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 ARDAGH METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and ARDAGH METAL.

Diversification Opportunities for Penn National and ARDAGH METAL

0.1

Correlation Coefficient

Penn National  ARDAGH METAL

Average diversification

The 3 months correlation between Penn and ARDAGH is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and ARDAGH METAL PACDL 0001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARDAGH METAL PACDL 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 ARDAGH METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARDAGH METAL PACDL has no effect on the direction of Penn National i.e., Penn National and ARDAGH METAL go up and down completely randomly.

Pair Corralation between Penn National and ARDAGH METAL

Assuming the 90 days horizon Penn National Gaming is expected to generate 1.1 times more return on investment than ARDAGH METAL. However, Penn National is 1.1 times more volatile than ARDAGH METAL PACDL 0001. It trades about -0.25 of its potential returns per unit of risk. ARDAGH METAL PACDL 0001 is currently generating about -0.54 per unit of risk. If you would invest  2,046  in Penn National Gaming on October 5, 2024 and sell it today you would lose (271.00) from holding Penn National Gaming or give up 13.25% of portfolio value over 90 days.

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

Penn National Gaming  vs.  ARDAGH METAL PACDL 0001

Penn National Gaming

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Penn National Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Penn National may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ARDAGH METAL PACDL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARDAGH METAL PACDL 0001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Penn National and ARDAGH METAL

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

The idea behind Penn National Gaming and ARDAGH METAL PACDL 0001 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.