Correlation Between Penn National and Apple

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

Diversification Opportunities for Penn National and Apple

0.78

Correlation Coefficient

Penn National  Apple

Poor diversification

The 3 months correlation between Penn and Apple is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Penn National i.e., Penn National and Apple go up and down completely randomly.

Pair Corralation between Penn National and Apple

Assuming the 90 days horizon Penn National Gaming is expected to generate 1.59 times more return on investment than Apple. However, Penn National is 1.59 times more volatile than Apple Inc. It trades about -0.04 of its potential returns per unit of risk. Apple Inc is currently generating about -0.13 per unit of risk. If you would invest  1,775  in Penn National Gaming on December 30, 2024 and sell it today you would lose (195.00) from holding Penn National Gaming or give up 10.99% of portfolio value over 90 days.

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

Penn National Gaming  vs.  Apple Inc

Penn National Gaming

Risk-Adjusted Performance

Very Weak

Over the last 90 days Penn National Gaming 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.

Apple Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Penn National and Apple

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

The idea behind Penn National Gaming and Apple Inc 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.