Correlation Between GAMESTOP and PENN NATL
Can any of the company-specific risk be diversified away by investing in both GAMESTOP 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 GAMESTOP and PENN NATL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GAMESTOP and PENN NATL GAMING, you can compare the effects of market volatilities on GAMESTOP 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 GAMESTOP with a short position of PENN NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMESTOP and PENN NATL.
Diversification Opportunities for GAMESTOP and PENN NATL
Poor diversification
The 3 months correlation between GAMESTOP and PENN is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GAMESTOP 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 GAMESTOP 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 GAMESTOP 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 GAMESTOP i.e., GAMESTOP and PENN NATL go up and down completely randomly.
Pair Corralation between GAMESTOP and PENN NATL
Assuming the 90 days trading horizon GAMESTOP is expected to generate 1.43 times more return on investment than PENN NATL. However, GAMESTOP is 1.43 times more volatile than PENN NATL GAMING. It trades about 0.43 of its potential returns per unit of risk. PENN NATL GAMING is currently generating about 0.15 per unit of risk. If you would invest 2,099 in GAMESTOP on August 30, 2024 and sell it today you would earn a total of 838.00 from holding GAMESTOP or generate 39.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GAMESTOP vs. PENN NATL GAMING
Performance |
| Timeline |
| GAMESTOP |
| PENN NATL GAMING |
GAMESTOP and PENN NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GAMESTOP and PENN NATL
The main advantage of trading using opposite GAMESTOP and PENN NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMESTOP 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.| GAMESTOP vs. Apple Inc | GAMESTOP vs. Apple Inc | GAMESTOP vs. Superior Plus Corp | GAMESTOP vs. SIVERS SEMICONDUCTORS AB |
| PENN NATL vs. COSMOSTEEL HLDGS | PENN NATL vs. LEGACY IRON ORE | PENN NATL vs. Mitsubishi Gas Chemical | PENN NATL vs. Tianjin Capital Environmental |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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