Correlation Between Penn National and Golden Entertainment
Can any of the company-specific risk be diversified away by investing in both Penn National and Golden Entertainment 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 Penn National and Golden Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penn National Gaming and Golden Entertainment, you can compare the effects of market volatilities on Penn National and Golden Entertainment 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 Penn National with a short position of Golden Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Golden Entertainment.
Diversification Opportunities for Penn National and Golden Entertainment
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Penn and Golden is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Golden Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Entertainment and Penn National 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 Penn National Gaming are associated (or correlated) with Golden Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Entertainment has no effect on the direction of Penn National i.e., Penn National and Golden Entertainment go up and down completely randomly.
Pair Corralation between Penn National and Golden Entertainment
Given the investment horizon of 90 days Penn National is expected to generate 2.39 times less return on investment than Golden Entertainment. In addition to that, Penn National is 1.19 times more volatile than Golden Entertainment. It trades about 0.07 of its total potential returns per unit of risk. Golden Entertainment is currently generating about 0.19 per unit of volatility. If you would invest 3,102 in Golden Entertainment on August 27, 2024 and sell it today you would earn a total of 286.00 from holding Golden Entertainment or generate 9.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. Golden Entertainment
Performance |
| Timeline |
| Penn National Gaming |
| Golden Entertainment |
Penn National and Golden Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Golden Entertainment
The main advantage of trading using opposite Penn National and Golden Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Golden Entertainment 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 Golden Entertainment will offset losses from the drop in Golden Entertainment's long position.| Penn National vs. DraftKings | Penn National vs. MGM Resorts International | Penn National vs. Caesars Entertainment | Penn National vs. Boyd Gaming |
| Golden Entertainment vs. Red Rock Resorts | Golden Entertainment vs. Century Casinos | Golden Entertainment vs. Studio City International | Golden Entertainment vs. Ballys Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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