Correlation Between PENN NATL and Intel
Can any of the company-specific risk be diversified away by investing in both PENN NATL and Intel 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 Intel 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 Intel, you can compare the effects of market volatilities on PENN NATL and Intel 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 Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and Intel.
Diversification Opportunities for PENN NATL and Intel
Very weak diversification
The 3 months correlation between PENN and Intel is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of PENN NATL i.e., PENN NATL and Intel go up and down completely randomly.
Pair Corralation between PENN NATL and Intel
Assuming the 90 days trading horizon PENN NATL GAMING is expected to generate 1.07 times more return on investment than Intel. However, PENN NATL is 1.07 times more volatile than Intel. It trades about 0.0 of its potential returns per unit of risk. Intel is currently generating about -0.07 per unit of risk. If you would invest 2,215 in PENN NATL GAMING on September 14, 2024 and sell it today you would lose (385.00) from holding PENN NATL GAMING or give up 17.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PENN NATL GAMING vs. Intel
Performance |
| Timeline |
| PENN NATL GAMING |
| Intel |
PENN NATL and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN NATL and Intel
The main advantage of trading using opposite PENN NATL and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN NATL position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.The idea behind PENN NATL GAMING and Intel 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.| Intel vs. JAPAN AIRLINES | Intel vs. PENN NATL GAMING | Intel vs. Media and Games | Intel vs. Southwest Airlines Co |
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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