Correlation Between Playtech Plc and Penn National
Can any of the company-specific risk be diversified away by investing in both Playtech Plc 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 Playtech Plc and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech plc and Penn National Gaming, you can compare the effects of market volatilities on Playtech Plc 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 Playtech Plc with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and Penn National.
Diversification Opportunities for Playtech Plc and Penn National
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Playtech and Penn is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc 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 Playtech Plc 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 Playtech plc 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 Playtech Plc i.e., Playtech Plc and Penn National go up and down completely randomly.
Pair Corralation between Playtech Plc and Penn National
Assuming the 90 days trading horizon Playtech plc is expected to generate 0.39 times more return on investment than Penn National. However, Playtech plc is 2.56 times less risky than Penn National. It trades about -0.06 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 878.00 in Playtech plc on December 8, 2024 and sell it today you would lose (15.00) from holding Playtech plc or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Playtech plc vs. Penn National Gaming
Performance |
| Timeline |
| Playtech plc |
| Penn National Gaming |
Playtech Plc and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtech Plc and Penn National
The main advantage of trading using opposite Playtech Plc and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc 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.| Playtech Plc vs. PennantPark 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 Stocks Directory module to find actively traded stocks across global markets.
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