Correlation Between Plastic Omnium and PENN NATL
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium 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 Plastic Omnium and PENN NATL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and PENN NATL GAMING, you can compare the effects of market volatilities on Plastic Omnium 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 Plastic Omnium with a short position of PENN NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and PENN NATL.
Diversification Opportunities for Plastic Omnium and PENN NATL
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Plastic and PENN is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium i.e., Plastic Omnium and PENN NATL go up and down completely randomly.
Pair Corralation between Plastic Omnium and PENN NATL
Assuming the 90 days trading horizon Plastic Omnium is expected to under-perform the PENN NATL. But the stock apears to be less risky and, when comparing its historical volatility, Plastic Omnium is 1.28 times less risky than PENN NATL. The stock trades about -0.02 of its potential returns per unit of risk. The PENN NATL GAMING is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,634 in PENN NATL GAMING on November 30, 2024 and sell it today you would lose (687.00) from holding PENN NATL GAMING or give up 26.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastic Omnium vs. PENN NATL GAMING
Performance |
| Timeline |
| Plastic Omnium |
| PENN NATL GAMING |
Plastic Omnium and PENN NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and PENN NATL
The main advantage of trading using opposite Plastic Omnium and PENN NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium 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.| Plastic Omnium vs. De Grey Mining | Plastic Omnium vs. Take Two Interactive Software | Plastic Omnium vs. ASM Pacific Technology | Plastic Omnium vs. Hastings Technology Metals |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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