Correlation Between Caseys General and PENN NATL
Can any of the company-specific risk be diversified away by investing in both Caseys General and PENN NATL 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 Caseys General and PENN NATL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caseys General Stores and PENN NATL GAMING, you can compare the effects of market volatilities on Caseys General and PENN NATL 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 Caseys General with a short position of PENN NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and PENN NATL.
Diversification Opportunities for Caseys General and PENN NATL
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caseys and PENN is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and PENN NATL GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN NATL GAMING and Caseys General 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 Caseys General Stores are associated (or correlated) with PENN NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN NATL GAMING has no effect on the direction of Caseys General i.e., Caseys General and PENN NATL go up and down completely randomly.
Pair Corralation between Caseys General and PENN NATL
Assuming the 90 days trading horizon Caseys General Stores is expected to under-perform the PENN NATL. But the stock apears to be less risky and, when comparing its historical volatility, Caseys General Stores is 2.91 times less risky than PENN NATL. The stock trades about -0.19 of its potential returns per unit of risk. The PENN NATL GAMING is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,872 in PENN NATL GAMING on October 11, 2024 and sell it today you would lose (46.00) from holding PENN NATL GAMING or give up 2.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caseys General Stores vs. PENN NATL GAMING
Performance |
| Timeline |
| Caseys General Stores |
| PENN NATL GAMING |
Caseys General and PENN NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and PENN NATL
The main advantage of trading using opposite Caseys General and PENN NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, PENN NATL 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 NATL will offset losses from the drop in PENN NATL's long position.| Caseys General vs. Xiwang Special Steel | Caseys General vs. ANTA SPORTS PRODUCT | Caseys General vs. Transport International Holdings | Caseys General vs. SIERRA METALS |
| PENN NATL vs. Caseys General Stores | PENN NATL vs. Agilent Technologies | PENN NATL vs. Amkor Technology | PENN NATL vs. Costco Wholesale Corp |
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.
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