Correlation Between Penn National and Wynn Resorts
Can any of the company-specific risk be diversified away by investing in both Penn National and Wynn Resorts 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 Wynn Resorts 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 Wynn Resorts Limited, you can compare the effects of market volatilities on Penn National and Wynn Resorts 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 Wynn Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Wynn Resorts.
Diversification Opportunities for Penn National and Wynn Resorts
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Penn and Wynn is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Wynn Resorts Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Resorts Limited 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 Wynn Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Resorts Limited has no effect on the direction of Penn National i.e., Penn National and Wynn Resorts go up and down completely randomly.
Pair Corralation between Penn National and Wynn Resorts
Given the investment horizon of 90 days Penn National Gaming is expected to under-perform the Wynn Resorts. In addition to that, Penn National is 1.62 times more volatile than Wynn Resorts Limited. It trades about -0.02 of its total potential returns per unit of risk. Wynn Resorts Limited is currently generating about 0.02 per unit of volatility. If you would invest 8,418 in Wynn Resorts Limited on August 24, 2024 and sell it today you would earn a total of 711.00 from holding Wynn Resorts Limited or generate 8.45% 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. Wynn Resorts Limited
Performance |
| Timeline |
| Penn National Gaming |
| Wynn Resorts Limited |
Penn National and Wynn Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Wynn Resorts
The main advantage of trading using opposite Penn National and Wynn Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Wynn Resorts 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 Wynn Resorts will offset losses from the drop in Wynn Resorts' long position.| Penn National vs. DraftKings | Penn National vs. MGM Resorts International | Penn National vs. Caesars Entertainment | Penn National vs. Boyd Gaming |
| Wynn Resorts vs. MGM Resorts International | Wynn Resorts vs. Caesars Entertainment | Wynn Resorts vs. Melco Resorts Entertainment | Wynn Resorts vs. Penn National Gaming |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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