Correlation Between Penn National and Gravity
Can any of the company-specific risk be diversified away by investing in both Penn National and Gravity 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 Gravity 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 Gravity Co, you can compare the effects of market volatilities on Penn National and Gravity 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 Gravity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Gravity.
Diversification Opportunities for Penn National and Gravity
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Penn and Gravity is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Gravity Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gravity 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 Gravity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gravity has no effect on the direction of Penn National i.e., Penn National and Gravity go up and down completely randomly.
Pair Corralation between Penn National and Gravity
Given the investment horizon of 90 days Penn National Gaming is expected to generate 2.02 times more return on investment than Gravity. However, Penn National is 2.02 times more volatile than Gravity Co. It trades about 0.19 of its potential returns per unit of risk. Gravity Co is currently generating about -0.03 per unit of risk. If you would invest 1,813 in Penn National Gaming on October 24, 2024 and sell it today you would earn a total of 189.00 from holding Penn National Gaming or generate 10.42% 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. Gravity Co
Performance |
| Timeline |
| Penn National Gaming |
| Gravity |
Penn National and Gravity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Gravity
The main advantage of trading using opposite Penn National and Gravity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Gravity 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 Gravity will offset losses from the drop in Gravity's long position.| Penn National vs. DraftKings | Penn National vs. MGM Resorts International | Penn National vs. Caesars Entertainment | Penn National vs. Boyd Gaming |
| Gravity vs. Doubledown Interactive Co | Gravity vs. Playtika Holding Corp | Gravity vs. NetEase | Gravity vs. SohuCom |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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