Correlation Between Penn National and NORWEGIAN AIR

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

Diversification Opportunities for Penn National and NORWEGIAN AIR

-0.44

Correlation Coefficient

Penn National  NORWEGIAN AIR

Very good diversification

The 3 months correlation between Penn and NORWEGIAN is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and NORWEGIAN AIR SHUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORWEGIAN AIR SHUT 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 NORWEGIAN AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORWEGIAN AIR SHUT has no effect on the direction of Penn National i.e., Penn National and NORWEGIAN AIR go up and down completely randomly.

Pair Corralation between Penn National and NORWEGIAN AIR

Assuming the 90 days horizon Penn National Gaming is expected to under-perform the NORWEGIAN AIR. In addition to that, Penn National is 1.07 times more volatile than NORWEGIAN AIR SHUT. It trades about -0.01 of its total potential returns per unit of risk. NORWEGIAN AIR SHUT is currently generating about 0.01 per unit of volatility. If you would invest  96.00  in NORWEGIAN AIR SHUT on September 27, 2024 and sell it today you would lose (3.00) from holding NORWEGIAN AIR SHUT or give up 3.12% of portfolio value over 90 days.

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

Penn National Gaming  vs.  NORWEGIAN AIR SHUT

Penn National Gaming

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Penn National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NORWEGIAN AIR SHUT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORWEGIAN AIR SHUT 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Penn National and NORWEGIAN AIR

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

The idea behind Penn National Gaming and NORWEGIAN AIR SHUT 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.