Correlation Between Phibro Animal and Penn National
Can any of the company-specific risk be diversified away by investing in both Phibro Animal 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 Phibro Animal and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phibro Animal Health and Penn National Gaming, you can compare the effects of market volatilities on Phibro Animal 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 Phibro Animal with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phibro Animal and Penn National.
Diversification Opportunities for Phibro Animal and Penn National
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Phibro and Penn is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Phibro Animal Health 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 Phibro Animal 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 Phibro Animal Health 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 Phibro Animal i.e., Phibro Animal and Penn National go up and down completely randomly.
Pair Corralation between Phibro Animal and Penn National
Assuming the 90 days horizon Phibro Animal Health is expected to generate 1.36 times more return on investment than Penn National. However, Phibro Animal is 1.36 times more volatile than Penn National Gaming. It trades about 0.0 of its potential returns per unit of risk. Penn National Gaming is currently generating about -0.1 per unit of risk. If you would invest 2,189 in Phibro Animal Health on December 8, 2024 and sell it today you would lose (29.00) from holding Phibro Animal Health or give up 1.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Phibro Animal Health vs. Penn National Gaming
Performance |
| Timeline |
| Phibro Animal Health |
| Penn National Gaming |
Phibro Animal and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phibro Animal and Penn National
The main advantage of trading using opposite Phibro Animal and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phibro Animal 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.| Phibro Animal vs. Gladstone Investment | ||
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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