Correlation Between PENN NATL and Shenandoah Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both PENN NATL and Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio 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 Shenandoah Telecommunications, you can compare the effects of market volatilities on PENN NATL and Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and Shenandoah Telecommunicatio.
Diversification Opportunities for PENN NATL and Shenandoah Telecommunicatio
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PENN and Shenandoah is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of PENN NATL i.e., PENN NATL and Shenandoah Telecommunicatio go up and down completely randomly.
Pair Corralation between PENN NATL and Shenandoah Telecommunicatio
Assuming the 90 days trading horizon PENN NATL GAMING is expected to generate 1.52 times more return on investment than Shenandoah Telecommunicatio. However, PENN NATL is 1.52 times more volatile than Shenandoah Telecommunications. It trades about -0.02 of its potential returns per unit of risk. Shenandoah Telecommunications is currently generating about -0.21 per unit of risk. If you would invest 1,956 in PENN NATL GAMING on October 17, 2024 and sell it today you would lose (39.00) from holding PENN NATL GAMING or give up 1.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
PENN NATL GAMING vs. Shenandoah Telecommunications
Performance |
| Timeline |
| PENN NATL GAMING |
| Shenandoah Telecommunicatio |
PENN NATL and Shenandoah Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN NATL and Shenandoah Telecommunicatio
The main advantage of trading using opposite PENN NATL and Shenandoah Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN NATL position performs unexpectedly, Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio will offset losses from the drop in Shenandoah Telecommunicatio's long position.| PENN NATL vs. TIANDE CHEMICAL | PENN NATL vs. The Hanover Insurance | PENN NATL vs. SILICON LABORATOR | PENN NATL vs. KINGBOARD CHEMICAL |
| Shenandoah Telecommunicatio vs. GAMING FAC SA | Shenandoah Telecommunicatio vs. Penn National Gaming | Shenandoah Telecommunicatio vs. PENN NATL GAMING | Shenandoah Telecommunicatio vs. CANON MARKETING JP |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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