Correlation Between PENN NATL and MSAD INSURANCE
Can any of the company-specific risk be diversified away by investing in both PENN NATL and MSAD INSURANCE 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 NATL and MSAD INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN NATL GAMING and MSAD INSURANCE, you can compare the effects of market volatilities on PENN NATL and MSAD INSURANCE 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 NATL with a short position of MSAD INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and MSAD INSURANCE.
Diversification Opportunities for PENN NATL and MSAD INSURANCE
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PENN and MSAD is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and MSAD INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSAD INSURANCE and PENN NATL 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 NATL GAMING are associated (or correlated) with MSAD INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSAD INSURANCE has no effect on the direction of PENN NATL i.e., PENN NATL and MSAD INSURANCE go up and down completely randomly.
Pair Corralation between PENN NATL and MSAD INSURANCE
Assuming the 90 days trading horizon PENN NATL GAMING is expected to generate 1.29 times more return on investment than MSAD INSURANCE. However, PENN NATL is 1.29 times more volatile than MSAD INSURANCE. It trades about 0.36 of its potential returns per unit of risk. MSAD INSURANCE is currently generating about 0.22 per unit of risk. If you would invest 1,772 in PENN NATL GAMING on September 5, 2024 and sell it today you would earn a total of 341.00 from holding PENN NATL GAMING or generate 19.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PENN NATL GAMING vs. MSAD INSURANCE
Performance |
| Timeline |
| PENN NATL GAMING |
| MSAD INSURANCE |
PENN NATL and MSAD INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN NATL and MSAD INSURANCE
The main advantage of trading using opposite PENN NATL and MSAD INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN NATL position performs unexpectedly, MSAD INSURANCE 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 MSAD INSURANCE will offset losses from the drop in MSAD INSURANCE's long position.The idea behind PENN NATL GAMING and MSAD INSURANCE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| MSAD INSURANCE vs. TOTAL GABON | MSAD INSURANCE vs. Walgreens Boots Alliance | MSAD INSURANCE vs. Peak Resources Limited |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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