Correlation Between PENN NATL and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both PENN NATL and Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical, you can compare the effects of market volatilities on PENN NATL and Quaker Chemical 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 Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and Quaker Chemical.
Diversification Opportunities for PENN NATL and Quaker Chemical
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PENN and Quaker is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of PENN NATL i.e., PENN NATL and Quaker Chemical go up and down completely randomly.
Pair Corralation between PENN NATL and Quaker Chemical
Assuming the 90 days trading horizon PENN NATL GAMING is expected to generate 2.65 times more return on investment than Quaker Chemical. However, PENN NATL is 2.65 times more volatile than Quaker Chemical. It trades about -0.03 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.56 per unit of risk. If you would invest 1,872 in PENN NATL GAMING on October 11, 2024 and sell it today you would lose (46.00) from holding PENN NATL GAMING or give up 2.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
PENN NATL GAMING vs. Quaker Chemical
Performance |
| Timeline |
| PENN NATL GAMING |
| Quaker Chemical |
PENN NATL and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN NATL and Quaker Chemical
The main advantage of trading using opposite PENN NATL and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN NATL position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| PENN NATL vs. Caseys General Stores | PENN NATL vs. Agilent Technologies | PENN NATL vs. Amkor Technology | PENN NATL vs. Costco Wholesale Corp |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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