Correlation Between International Game and Penn National
Can any of the company-specific risk be diversified away by investing in both International Game 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 International Game and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Game Technology and Penn National Gaming, you can compare the effects of market volatilities on International Game 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 International Game with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Game and Penn National.
Diversification Opportunities for International Game and Penn National
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Penn is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology 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 International Game 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 International Game Technology 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 International Game i.e., International Game and Penn National go up and down completely randomly.
Pair Corralation between International Game and Penn National
Considering the 90-day investment horizon International Game Technology is expected to under-perform the Penn National. But the stock apears to be less risky and, when comparing its historical volatility, International Game Technology is 1.52 times less risky than Penn National. The stock trades about -0.15 of its potential returns per unit of risk. The Penn National Gaming is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,945 in Penn National Gaming on September 2, 2024 and sell it today you would earn a total of 214.00 from holding Penn National Gaming or generate 11.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Game Technology vs. Penn National Gaming
Performance |
| Timeline |
| International Game |
| Penn National Gaming |
International Game and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Game and Penn National
The main advantage of trading using opposite International Game and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Game 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.The idea behind International Game Technology and Penn National Gaming pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Penn National vs. DraftKings | Penn National vs. MGM Resorts International | Penn National vs. Caesars Entertainment | Penn National vs. Boyd Gaming |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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