Correlation Between Apple and Penn National
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Penn National Gaming, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Penn National.
Diversification Opportunities for Apple and Penn National
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and Penn is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Apple 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 Apple 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 Apple 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 Apple i.e., Apple and Penn National go up and down completely randomly.
Pair Corralation between Apple and Penn National
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.45 times more return on investment than Penn National. However, Apple Inc is 2.24 times less risky than Penn National. It trades about 0.07 of its potential returns per unit of risk. Penn National Gaming is currently generating about -0.01 per unit of risk. If you would invest 13,272 in Apple Inc on August 28, 2024 and sell it today you would earn a total of 8,638 from holding Apple Inc or generate 65.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Penn National Gaming
Performance |
| Timeline |
| Apple Inc |
| Penn National Gaming |
Apple and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Penn National
The main advantage of trading using opposite Apple and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Penn National Gaming | Apple vs. Fast Retailing Co | Apple vs. Hochschild Mining plc | Apple vs. AUTO TRADER ADR |
| Penn National vs. Autohome ADR | Penn National vs. Ribbon Communications | Penn National vs. Taylor Morrison Home | Penn National vs. Aedas Homes SA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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