Correlation Between Peak Resources and PENN NATL
Can any of the company-specific risk be diversified away by investing in both Peak Resources 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 Peak Resources and PENN NATL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peak Resources Limited and PENN NATL GAMING, you can compare the effects of market volatilities on Peak Resources 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 Peak Resources with a short position of PENN NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peak Resources and PENN NATL.
Diversification Opportunities for Peak Resources and PENN NATL
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Peak and PENN is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited 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 Peak Resources 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 Peak Resources Limited 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 Peak Resources i.e., Peak Resources and PENN NATL go up and down completely randomly.
Pair Corralation between Peak Resources and PENN NATL
Assuming the 90 days horizon Peak Resources Limited is expected to generate 4.04 times more return on investment than PENN NATL. However, Peak Resources is 4.04 times more volatile than PENN NATL GAMING. It trades about 0.1 of its potential returns per unit of risk. PENN NATL GAMING is currently generating about -0.09 per unit of risk. If you would invest 5.80 in Peak Resources Limited on September 12, 2024 and sell it today you would earn a total of 0.70 from holding Peak Resources Limited or generate 12.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Peak Resources Limited vs. PENN NATL GAMING
Performance |
| Timeline |
| Peak Resources |
| PENN NATL GAMING |
Peak Resources and PENN NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peak Resources and PENN NATL
The main advantage of trading using opposite Peak Resources and PENN NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peak Resources 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.| Peak Resources vs. NEWELL RUBBERMAID | Peak Resources vs. The Yokohama Rubber | Peak Resources vs. Hyster Yale Materials Handling | Peak Resources vs. Park Hotels Resorts |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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