Correlation Between Capital Income and Penn National
Can any of the company-specific risk be diversified away by investing in both Capital Income 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 Capital Income and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Income Builder and Penn National Gaming, you can compare the effects of market volatilities on Capital Income 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 Capital Income with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Penn National.
Diversification Opportunities for Capital Income and Penn National
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and Penn is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder 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 Capital Income 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 Capital Income Builder 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 Capital Income i.e., Capital Income and Penn National go up and down completely randomly.
Pair Corralation between Capital Income and Penn National
Assuming the 90 days horizon Capital Income is expected to generate 3.56 times less return on investment than Penn National. But when comparing it to its historical volatility, Capital Income Builder is 5.73 times less risky than Penn National. It trades about 0.23 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 Against |
| Strength | Insignificant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Capital Income Builder vs. Penn National Gaming
Performance |
| Timeline |
| Capital Income Builder |
| Penn National Gaming |
Capital Income and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and Penn National
The main advantage of trading using opposite Capital Income and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income 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.| Capital Income vs. Legg Mason Partners | Capital Income vs. Artisan Developing World | Capital Income vs. Ab All Market | Capital Income vs. Oklahoma College Savings |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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