Correlation Between American Balanced and Penn National
Can any of the company-specific risk be diversified away by investing in both American Balanced 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 American Balanced and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and Penn National Gaming, you can compare the effects of market volatilities on American Balanced 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 American Balanced with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Penn National.
Diversification Opportunities for American Balanced and Penn National
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Penn is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced 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 American Balanced 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 American Balanced 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 American Balanced i.e., American Balanced and Penn National go up and down completely randomly.
Pair Corralation between American Balanced and Penn National
Assuming the 90 days horizon American Balanced is expected to generate 3.95 times less return on investment than Penn National. But when comparing it to its historical volatility, American Balanced is 5.65 times less risky than Penn National. It trades about 0.2 of its potential returns per unit of risk. Penn National Gaming is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,781 in Penn National Gaming on October 23, 2024 and sell it today you would earn a total of 130.00 from holding Penn National Gaming or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 89.47% |
| Values | Daily Returns |
American Balanced vs. Penn National Gaming
Performance |
| Timeline |
| American Balanced |
| Penn National Gaming |
American Balanced and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Penn National
The main advantage of trading using opposite American Balanced and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced 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.| American Balanced vs. Income Fund Of | American Balanced vs. Capital Income Builder | American Balanced vs. Capital World Growth | American Balanced vs. Growth Fund Of |
| Penn National vs. Apollo Medical Holdings | Penn National vs. Datadog | Penn National vs. MICRONIC MYDATA | Penn National vs. Northern Data AG |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |