Correlation Between Penn National and Red Rock
Can any of the company-specific risk be diversified away by investing in both Penn National and Red Rock 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 Red Rock 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 Red Rock Resorts, you can compare the effects of market volatilities on Penn National and Red Rock 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 Red Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Red Rock.
Diversification Opportunities for Penn National and Red Rock
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Penn and Red is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Red Rock Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Rock Resorts 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 Red Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Rock Resorts has no effect on the direction of Penn National i.e., Penn National and Red Rock go up and down completely randomly.
Pair Corralation between Penn National and Red Rock
Given the investment horizon of 90 days Penn National Gaming is expected to under-perform the Red Rock. In addition to that, Penn National is 1.58 times more volatile than Red Rock Resorts. It trades about -0.02 of its total potential returns per unit of risk. Red Rock Resorts is currently generating about 0.03 per unit of volatility. If you would invest 4,065 in Red Rock Resorts on August 24, 2024 and sell it today you would earn a total of 938.00 from holding Red Rock Resorts or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. Red Rock Resorts
Performance |
| Timeline |
| Penn National Gaming |
| Red Rock Resorts |
Penn National and Red Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Red Rock
The main advantage of trading using opposite Penn National and Red Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Red Rock 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 Red Rock will offset losses from the drop in Red Rock's long position.| Penn National vs. DraftKings | Penn National vs. MGM Resorts International | Penn National vs. Caesars Entertainment | Penn National vs. Boyd Gaming |
| Red Rock vs. Golden Entertainment | Red Rock vs. Century Casinos | Red Rock vs. Studio City International | Red Rock 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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