Correlation Between Penn National and Carsales
Can any of the company-specific risk be diversified away by investing in both Penn National and Carsales 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 Carsales 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 Carsales, you can compare the effects of market volatilities on Penn National and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Carsales.
Diversification Opportunities for Penn National and Carsales
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Penn and Carsales is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carsales has no effect on the direction of Penn National i.e., Penn National and Carsales go up and down completely randomly.
Pair Corralation between Penn National and Carsales
Assuming the 90 days horizon Penn National Gaming is expected to under-perform the Carsales. In addition to that, Penn National is 2.13 times more volatile than Carsales. It trades about -0.01 of its total potential returns per unit of risk. Carsales is currently generating about 0.08 per unit of volatility. If you would invest 1,208 in Carsales on September 26, 2024 and sell it today you would earn a total of 1,012 from holding Carsales or generate 83.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Penn National Gaming vs. Carsales
Performance |
Timeline |
Penn National Gaming |
Carsales |
Penn National and Carsales Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Penn National and Carsales
The main advantage of trading using opposite Penn National and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.Penn National vs. Las Vegas Sands | Penn National vs. Galaxy Entertainment Group | Penn National vs. Sands China | Penn National vs. MGM Resorts International |
Carsales vs. GAMING FAC SA | Carsales vs. Scientific Games | Carsales vs. Games Workshop Group | Carsales vs. Penn National Gaming |
Check out your portfolio center.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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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