Correlation Between Mount Gibson and Penn National
Can any of the company-specific risk be diversified away by investing in both Mount Gibson 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 Mount Gibson and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mount Gibson Iron and Penn National Gaming, you can compare the effects of market volatilities on Mount Gibson 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 Mount Gibson with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mount Gibson and Penn National.
Diversification Opportunities for Mount Gibson and Penn National
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mount and Penn is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Mount Gibson Iron 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 Mount Gibson 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 Mount Gibson Iron 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 Mount Gibson i.e., Mount Gibson and Penn National go up and down completely randomly.
Pair Corralation between Mount Gibson and Penn National
Assuming the 90 days horizon Mount Gibson Iron is expected to under-perform the Penn National. But the stock apears to be less risky and, when comparing its historical volatility, Mount Gibson Iron is 1.46 times less risky than Penn National. The stock trades about -0.24 of its potential returns per unit of risk. The Penn National Gaming is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,871 in Penn National Gaming on October 11, 2024 and sell it today you would lose (60.00) from holding Penn National Gaming or give up 3.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mount Gibson Iron vs. Penn National Gaming
Performance |
| Timeline |
| Mount Gibson Iron |
| Penn National Gaming |
Mount Gibson and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mount Gibson and Penn National
The main advantage of trading using opposite Mount Gibson and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mount Gibson 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.| Mount Gibson vs. American Eagle Outfitters | Mount Gibson vs. PARKEN Sport Entertainment | Mount Gibson vs. SPORTING | Mount Gibson vs. SOEDER SPORTFISKE AB |
| Penn National vs. United States Steel | Penn National vs. CALTAGIRONE EDITORE | Penn National vs. Mount Gibson Iron | Penn National vs. Nippon Steel |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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