Correlation Between Penn National and RYU Apparel

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

Diversification Opportunities for Penn National and RYU Apparel

0.0

Correlation Coefficient

Penn National  RYU Apparel

Pay attention - limited upside

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

Pair Corralation between Penn National and RYU Apparel

If you would invest  1,951  in Penn National Gaming on December 2, 2024 and sell it today you would lose (3.00) from holding Penn National Gaming or give up 0.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Penn National Gaming  vs.  RYU Apparel

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 nearly stable basic indicators, Penn National is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

RYU Apparel

Risk-Adjusted Performance

Very Weak

Over the last 90 days RYU Apparel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, RYU Apparel is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Penn National and RYU Apparel

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

The idea behind Penn National Gaming and RYU Apparel 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.