Correlation Between Penn National and Atea ASA

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

Diversification Opportunities for Penn National and Atea ASA

0.4

Correlation Coefficient

Penn National  Atea ASA

Very weak diversification

The 3 months correlation between Penn and Atea is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Atea ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea ASA 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 Atea ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atea ASA has no effect on the direction of Penn National i.e., Penn National and Atea ASA go up and down completely randomly.

Pair Corralation between Penn National and Atea ASA

Assuming the 90 days horizon Penn National Gaming is expected to under-perform the Atea ASA. In addition to that, Penn National is 2.01 times more volatile than Atea ASA. It trades about -0.25 of its total potential returns per unit of risk. Atea ASA is currently generating about -0.02 per unit of volatility. If you would invest  1,174  in Atea ASA on October 5, 2024 and sell it today you would lose (10.00) from holding Atea ASA or give up 0.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Penn National Gaming  vs.  Atea ASA

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.

Atea ASA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atea ASA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Atea ASA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penn National and Atea ASA

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

The idea behind Penn National Gaming and Atea ASA 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.