Correlation Between Penn National and PICKN PAY

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

Diversification Opportunities for Penn National and PICKN PAY

0.36

Correlation Coefficient

Penn National  PICKN PAY

Weak diversification

The 3 months correlation between Penn and PICKN is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and PICKN PAY STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PICKN PAY STORES 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 PICKN PAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PICKN PAY STORES has no effect on the direction of Penn National i.e., Penn National and PICKN PAY go up and down completely randomly.

Pair Corralation between Penn National and PICKN PAY

Assuming the 90 days horizon Penn National Gaming is expected to under-perform the PICKN PAY. In addition to that, Penn National is 1.04 times more volatile than PICKN PAY STORES. It trades about -0.01 of its total potential returns per unit of risk. PICKN PAY STORES is currently generating about -0.01 per unit of volatility. If you would invest  237.00  in PICKN PAY STORES on October 10, 2024 and sell it today you would lose (78.00) from holding PICKN PAY STORES or give up 32.91% of portfolio value over 90 days.

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

Penn National Gaming  vs.  PICKN PAY STORES

Penn National Gaming

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Penn National reported solid returns over the last few months and may actually be approaching a breakup point.

PICKN PAY STORES

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PICKN PAY STORES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PICKN PAY unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penn National and PICKN PAY

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

The idea behind Penn National Gaming and PICKN PAY STORES 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.