Correlation Between PENN NATL and NTG Nordic
Can any of the company-specific risk be diversified away by investing in both PENN NATL and NTG Nordic 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 NTG Nordic 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 NTG Nordic Transport, you can compare the effects of market volatilities on PENN NATL and NTG Nordic 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 NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and NTG Nordic.
Diversification Opportunities for PENN NATL and NTG Nordic
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PENN and NTG is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport 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 NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of PENN NATL i.e., PENN NATL and NTG Nordic go up and down completely randomly.
Pair Corralation between PENN NATL and NTG Nordic
Assuming the 90 days trading horizon PENN NATL GAMING is expected to generate 1.69 times more return on investment than NTG Nordic. However, PENN NATL is 1.69 times more volatile than NTG Nordic Transport. It trades about 0.3 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.06 per unit of risk. If you would invest 1,772 in PENN NATL GAMING on September 4, 2024 and sell it today you would earn a total of 267.00 from holding PENN NATL GAMING or generate 15.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
PENN NATL GAMING vs. NTG Nordic Transport
Performance |
| Timeline |
| PENN NATL GAMING |
| NTG Nordic Transport |
PENN NATL and NTG Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN NATL and NTG Nordic
The main advantage of trading using opposite PENN NATL and NTG Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN NATL position performs unexpectedly, NTG Nordic 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 NTG Nordic will offset losses from the drop in NTG Nordic's long position.The idea behind PENN NATL GAMING and NTG Nordic Transport 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.| NTG Nordic vs. Kuehne Nagel International | NTG Nordic vs. Superior Plus Corp | NTG Nordic vs. NMI Holdings | NTG Nordic vs. Origin Agritech |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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