Correlation Between LION ONE and Penn National
Can any of the company-specific risk be diversified away by investing in both LION ONE 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 LION ONE and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LION ONE METALS and Penn National Gaming, you can compare the effects of market volatilities on LION ONE 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 LION ONE with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Penn National.
Diversification Opportunities for LION ONE and Penn National
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between LION and Penn is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS 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 LION ONE 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 LION ONE METALS 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 LION ONE i.e., LION ONE and Penn National go up and down completely randomly.
Pair Corralation between LION ONE and Penn National
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Penn National. In addition to that, LION ONE is 1.16 times more volatile than Penn National Gaming. It trades about -0.03 of its total potential returns per unit of risk. Penn National Gaming is currently generating about -0.01 per unit of volatility. If you would invest 3,109 in Penn National Gaming on September 2, 2024 and sell it today you would lose (1,125) from holding Penn National Gaming or give up 36.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LION ONE METALS vs. Penn National Gaming
Performance |
| Timeline |
| LION ONE METALS |
| Penn National Gaming |
LION ONE and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and Penn National
The main advantage of trading using opposite LION ONE and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE 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.| LION ONE vs. Public Storage | LION ONE vs. NTG Nordic Transport | LION ONE vs. Automatic Data Processing | LION ONE vs. Fidelity National Information |
| Penn National vs. Superior Plus Corp | Penn National vs. NMI Holdings | Penn National vs. Origin Agritech | Penn National vs. SIVERS SEMICONDUCTORS AB |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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