Correlation Between PENN NATL and FUTURE GAMING
Can any of the company-specific risk be diversified away by investing in both PENN NATL and FUTURE GAMING 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 FUTURE GAMING 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 FUTURE GAMING GRP, you can compare the effects of market volatilities on PENN NATL and FUTURE GAMING 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 FUTURE GAMING. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and FUTURE GAMING.
Diversification Opportunities for PENN NATL and FUTURE GAMING
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PENN and FUTURE is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and FUTURE GAMING GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUTURE GAMING GRP 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 FUTURE GAMING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUTURE GAMING GRP has no effect on the direction of PENN NATL i.e., PENN NATL and FUTURE GAMING go up and down completely randomly.
Pair Corralation between PENN NATL and FUTURE GAMING
Assuming the 90 days trading horizon PENN NATL is expected to generate 2.39 times less return on investment than FUTURE GAMING. But when comparing it to its historical volatility, PENN NATL GAMING is 1.7 times less risky than FUTURE GAMING. It trades about 0.04 of its potential returns per unit of risk. FUTURE GAMING GRP is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 44.00 in FUTURE GAMING GRP on August 27, 2024 and sell it today you would earn a total of 19.00 from holding FUTURE GAMING GRP or generate 43.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PENN NATL GAMING vs. FUTURE GAMING GRP
Performance |
| Timeline |
| PENN NATL GAMING |
| FUTURE GAMING GRP |
PENN NATL and FUTURE GAMING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN NATL and FUTURE GAMING
The main advantage of trading using opposite PENN NATL and FUTURE GAMING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN NATL position performs unexpectedly, FUTURE GAMING 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 FUTURE GAMING will offset losses from the drop in FUTURE GAMING's long position.The idea behind PENN NATL GAMING and FUTURE GAMING GRP 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.| FUTURE GAMING vs. Evolution AB | FUTURE GAMING vs. Scientific Games | FUTURE GAMING vs. International Game Technology |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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