Correlation Between MGM Resorts and Penn National
Can any of the company-specific risk be diversified away by investing in both MGM Resorts 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 MGM Resorts and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGM Resorts International and Penn National Gaming, you can compare the effects of market volatilities on MGM Resorts 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 MGM Resorts with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGM Resorts and Penn National.
Diversification Opportunities for MGM Resorts and Penn National
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MGM and Penn is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding MGM Resorts International 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 MGM Resorts 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 MGM Resorts International 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 MGM Resorts i.e., MGM Resorts and Penn National go up and down completely randomly.
Pair Corralation between MGM Resorts and Penn National
Assuming the 90 days horizon MGM Resorts International is expected to under-perform the Penn National. But the stock apears to be less risky and, when comparing its historical volatility, MGM Resorts International is 1.63 times less risky than Penn National. The stock trades about -0.02 of its potential returns per unit of risk. The Penn National Gaming is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,595 in Penn National Gaming on December 10, 2024 and sell it today you would lose (826.00) from holding Penn National Gaming or give up 31.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGM Resorts International vs. Penn National Gaming
Performance |
| Timeline |
| MGM Resorts International |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Penn National Gaming |
MGM Resorts and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGM Resorts and Penn National
The main advantage of trading using opposite MGM Resorts and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGM Resorts 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.| MGM Resorts vs. ELMOS SEMICONDUCTOR | MGM Resorts vs. Taiwan Semiconductor Manufacturing | MGM Resorts vs. Fukuyama Transporting Co | MGM Resorts vs. Semiconductor Manufacturing International |
| Penn National vs. REVO INSURANCE SPA | Penn National vs. Vienna Insurance Group | Penn National vs. Zurich Insurance Group | Penn National vs. Direct Line Insurance |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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