Correlation Between Dave Busters and Penn National
Can any of the company-specific risk be diversified away by investing in both Dave Busters 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 Dave Busters and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dave Busters Entertainment and Penn National Gaming, you can compare the effects of market volatilities on Dave Busters 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 Dave Busters with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and Penn National.
Diversification Opportunities for Dave Busters and Penn National
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dave and Penn is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment 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 Dave Busters 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 Dave Busters Entertainment 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 Dave Busters i.e., Dave Busters and Penn National go up and down completely randomly.
Pair Corralation between Dave Busters and Penn National
Assuming the 90 days horizon Dave Busters is expected to generate 1.58 times less return on investment than Penn National. In addition to that, Dave Busters is 1.35 times more volatile than Penn National Gaming. It trades about 0.1 of its total potential returns per unit of risk. Penn National Gaming is currently generating about 0.21 per unit of volatility. If you would invest 1,771 in Penn National Gaming on September 4, 2024 and sell it today you would earn a total of 213.00 from holding Penn National Gaming or generate 12.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dave Busters Entertainment vs. Penn National Gaming
Performance |
| Timeline |
| Dave Busters Enterta |
| Penn National Gaming |
Dave Busters and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dave Busters and Penn National
The main advantage of trading using opposite Dave Busters and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave Busters 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.| Dave Busters vs. McDonalds | Dave Busters vs. Chipotle Mexican Grill | Dave Busters vs. Superior Plus Corp | Dave Busters vs. NMI Holdings |
| Penn National vs. CARSALESCOM | Penn National vs. Lery Seafood Group | Penn National vs. Dairy Farm International | Penn National vs. COMMERCIAL VEHICLE |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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