Correlation Between PENN NATL and JERICHO OIL
Can any of the company-specific risk be diversified away by investing in both PENN NATL and JERICHO OIL 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 JERICHO OIL 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 JERICHO OIL, you can compare the effects of market volatilities on PENN NATL and JERICHO OIL 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 JERICHO OIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and JERICHO OIL.
Diversification Opportunities for PENN NATL and JERICHO OIL
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PENN and JERICHO is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and JERICHO OIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JERICHO OIL 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 JERICHO OIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JERICHO OIL has no effect on the direction of PENN NATL i.e., PENN NATL and JERICHO OIL go up and down completely randomly.
Pair Corralation between PENN NATL and JERICHO OIL
Assuming the 90 days trading horizon PENN NATL is expected to generate 6.29 times less return on investment than JERICHO OIL. But when comparing it to its historical volatility, PENN NATL GAMING is 2.76 times less risky than JERICHO OIL. It trades about 0.01 of its potential returns per unit of risk. JERICHO OIL is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 15.00 in JERICHO OIL on November 28, 2024 and sell it today you would lose (5.75) from holding JERICHO OIL or give up 38.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.7% |
| Values | Daily Returns |
PENN NATL GAMING vs. JERICHO OIL
Performance |
| Timeline |
| PENN NATL GAMING |
| JERICHO OIL |
PENN NATL and JERICHO OIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN NATL and JERICHO OIL
The main advantage of trading using opposite PENN NATL and JERICHO OIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN NATL position performs unexpectedly, JERICHO OIL 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 JERICHO OIL will offset losses from the drop in JERICHO OIL's long position.| PENN NATL vs. Casio Computer CoLtd | PENN NATL vs. China Communications Construction | PENN NATL vs. VARIOUS EATERIES LS | PENN NATL vs. Singapore Telecommunications Limited |
| JERICHO OIL vs. PLAYMATES TOYS | JERICHO OIL vs. DETALION GAMES SA | JERICHO OIL vs. GAMING FAC SA | JERICHO OIL vs. Nucletron Electronic Aktiengesellschaft |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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