Correlation Between 26875PAN1 and Penn National

Can any of the company-specific risk be diversified away by investing in both 26875PAN1 and Penn National 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 26875PAN1 and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EOG RES INC and Penn National Gaming, you can compare the effects of market volatilities on 26875PAN1 and Penn National 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 26875PAN1 with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of 26875PAN1 and Penn National.

Diversification Opportunities for 26875PAN1 and Penn National

0.14

Correlation Coefficient

26875PAN1  Penn National

Average diversification

The 3 months correlation between 26875PAN1 and Penn is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding EOG RES INC and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National Gaming and 26875PAN1 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 EOG RES INC are associated (or correlated) with Penn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of 26875PAN1 i.e., 26875PAN1 and Penn National go up and down completely randomly.

Pair Corralation between 26875PAN1 and Penn National

Assuming the 90 days trading horizon 26875PAN1 is expected to generate 12.71 times less return on investment than Penn National. But when comparing it to its historical volatility, EOG RES INC is 3.59 times less risky than Penn National. It trades about 0.01 of its potential returns per unit of risk. Penn National Gaming is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,628  in Penn National Gaming on October 12, 2024 and sell it today you would earn a total of  201.00  from holding Penn National Gaming or generate 12.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.19%
Values	Daily Returns

EOG RES INC  vs.  Penn National Gaming

EOG RES INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EOG RES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26875PAN1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Penn National Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Penn National Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Penn National is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with 26875PAN1 and Penn National

The main advantage of trading using opposite 26875PAN1 and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 26875PAN1 position performs unexpectedly, Penn National 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 Penn National will offset losses from the drop in Penn National's long position.

The idea behind EOG RES INC and Penn National Gaming 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.