Correlation Between GAMESTOP and Penn National
Can any of the company-specific risk be diversified away by investing in both GAMESTOP 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 GAMESTOP and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GAMESTOP and Penn National Gaming, you can compare the effects of market volatilities on GAMESTOP 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 GAMESTOP with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMESTOP and Penn National.
Diversification Opportunities for GAMESTOP and Penn National
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GAMESTOP and Penn is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding GAMESTOP 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 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 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 GAMESTOP i.e., GAMESTOP and Penn National go up and down completely randomly.
Pair Corralation between GAMESTOP and Penn National
Assuming the 90 days trading horizon GAMESTOP is expected to generate 1.22 times more return on investment than Penn National. However, GAMESTOP is 1.22 times more volatile than Penn National Gaming. It trades about 0.43 of its potential returns per unit of risk. Penn National Gaming is currently generating about 0.16 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GAMESTOP vs. Penn National Gaming
Performance |
| Timeline |
| GAMESTOP |
| Penn National Gaming |
GAMESTOP and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GAMESTOP and Penn National
The main advantage of trading using opposite GAMESTOP and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMESTOP 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.| GAMESTOP vs. Apple Inc | GAMESTOP vs. Apple Inc | GAMESTOP vs. Superior Plus Corp | GAMESTOP vs. SIVERS SEMICONDUCTORS AB |
| Penn National vs. TRADEGATE | Penn National vs. Salesforce | Penn National vs. Sunstone Hotel Investors | Penn National vs. MIRAMAR HOTEL INV |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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