Correlation Between PENN NATL and ARDAGH METAL
Can any of the company-specific risk be diversified away by investing in both PENN NATL and ARDAGH METAL 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 ARDAGH METAL 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 ARDAGH METAL PACDL 0001, you can compare the effects of market volatilities on PENN NATL and ARDAGH METAL 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 ARDAGH METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and ARDAGH METAL.
Diversification Opportunities for PENN NATL and ARDAGH METAL
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PENN and ARDAGH is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and ARDAGH METAL PACDL 0001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARDAGH METAL PACDL 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 ARDAGH METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARDAGH METAL PACDL has no effect on the direction of PENN NATL i.e., PENN NATL and ARDAGH METAL go up and down completely randomly.
Pair Corralation between PENN NATL and ARDAGH METAL
Assuming the 90 days trading horizon PENN NATL GAMING is expected to generate 0.73 times more return on investment than ARDAGH METAL. However, PENN NATL GAMING is 1.36 times less risky than ARDAGH METAL. It trades about 0.1 of its potential returns per unit of risk. ARDAGH METAL PACDL 0001 is currently generating about 0.05 per unit of risk. If you would invest 1,893 in PENN NATL GAMING on September 1, 2024 and sell it today you would earn a total of 90.00 from holding PENN NATL GAMING or generate 4.75% 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. ARDAGH METAL PACDL 0001
Performance |
| Timeline |
| PENN NATL GAMING |
| ARDAGH METAL PACDL |
PENN NATL and ARDAGH METAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN NATL and ARDAGH METAL
The main advantage of trading using opposite PENN NATL and ARDAGH METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN NATL position performs unexpectedly, ARDAGH METAL 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 ARDAGH METAL will offset losses from the drop in ARDAGH METAL's long position.| PENN NATL vs. SIVERS SEMICONDUCTORS AB | PENN NATL vs. Darden Restaurants | PENN NATL vs. Reliance Steel Aluminum | PENN NATL vs. Q2M Managementberatung AG |
| ARDAGH METAL vs. Charter Communications | ARDAGH METAL vs. Cogent Communications Holdings | ARDAGH METAL vs. Computershare Limited | ARDAGH METAL vs. Verizon Communications |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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