Correlation Between Penn National and HOCHSCHILD MINING

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

Diversification Opportunities for Penn National and HOCHSCHILD MINING

-0.63

Correlation Coefficient

Penn National  HOCHSCHILD MINING

Excellent diversification

The 3 months correlation between Penn and HOCHSCHILD is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and HOCHSCHILD MINING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOCHSCHILD MINING 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 HOCHSCHILD MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOCHSCHILD MINING has no effect on the direction of Penn National i.e., Penn National and HOCHSCHILD MINING go up and down completely randomly.

Pair Corralation between Penn National and HOCHSCHILD MINING

Assuming the 90 days horizon Penn National Gaming is expected to under-perform the HOCHSCHILD MINING. But the stock apears to be less risky and, when comparing its historical volatility, Penn National Gaming is 1.22 times less risky than HOCHSCHILD MINING. The stock trades about -0.04 of its potential returns per unit of risk. The HOCHSCHILD MINING is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  256.00  in HOCHSCHILD MINING on December 30, 2024 and sell it today you would earn a total of  71.00  from holding HOCHSCHILD MINING or generate 27.73% return on investment over 90 days.

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

Penn National Gaming  vs.  HOCHSCHILD MINING

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.

HOCHSCHILD MINING

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HOCHSCHILD MINING are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, HOCHSCHILD MINING exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penn National and HOCHSCHILD MINING

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

The idea behind Penn National Gaming and HOCHSCHILD MINING 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.