Correlation Between Penn National and CONTAGIOUS GAMING

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

Diversification Opportunities for Penn National and CONTAGIOUS GAMING

0.0

Correlation Coefficient

Penn National  CONTAGIOUS GAMING

Pay attention - limited upside

The 3 months correlation between Penn and CONTAGIOUS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and CONTAGIOUS GAMING INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONTAGIOUS GAMING 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 CONTAGIOUS GAMING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONTAGIOUS GAMING INC has no effect on the direction of Penn National i.e., Penn National and CONTAGIOUS GAMING go up and down completely randomly.

Pair Corralation between Penn National and CONTAGIOUS GAMING

Assuming the 90 days horizon Penn National Gaming is expected to under-perform the CONTAGIOUS GAMING. But the stock apears to be less risky and, when comparing its historical volatility, Penn National Gaming is 36.63 times less risky than CONTAGIOUS GAMING. The stock trades about -0.01 of its potential returns per unit of risk. The CONTAGIOUS GAMING INC is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  0.35  in CONTAGIOUS GAMING INC on October 11, 2024 and sell it today you would lose (0.05) from holding CONTAGIOUS GAMING INC or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Penn National Gaming  vs.  CONTAGIOUS GAMING INC

Penn National Gaming

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 4 (%) 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 February 2025.

CONTAGIOUS GAMING INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONTAGIOUS GAMING INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CONTAGIOUS GAMING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Penn National and CONTAGIOUS GAMING

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

The idea behind Penn National Gaming and CONTAGIOUS GAMING 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.