Correlation Between Penn National and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both Penn National and Aedas Homes 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 National and Aedas Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penn National Gaming and Aedas Homes SA, you can compare the effects of market volatilities on Penn National and Aedas Homes 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 National with a short position of Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Aedas Homes.
Diversification Opportunities for Penn National and Aedas Homes
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Penn and Aedas is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Aedas Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SA and Penn National 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 National Gaming are associated (or correlated) with Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SA has no effect on the direction of Penn National i.e., Penn National and Aedas Homes go up and down completely randomly.
Pair Corralation between Penn National and Aedas Homes
Assuming the 90 days horizon Penn National Gaming is expected to under-perform the Aedas Homes. In addition to that, Penn National is 1.89 times more volatile than Aedas Homes SA. It trades about -0.01 of its total potential returns per unit of risk. Aedas Homes SA is currently generating about 0.12 per unit of volatility. If you would invest 940.00 in Aedas Homes SA on September 12, 2024 and sell it today you would earn a total of 1,570 from holding Aedas Homes SA or generate 167.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. Aedas Homes SA
Performance |
| Timeline |
| Penn National Gaming |
| Aedas Homes SA |
Penn National and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Aedas Homes
The main advantage of trading using opposite Penn National and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Aedas Homes 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 Aedas Homes will offset losses from the drop in Aedas Homes' long position.| Penn National vs. Sands China | Penn National vs. Superior Plus Corp | Penn National vs. SIVERS SEMICONDUCTORS AB | Penn National vs. Norsk Hydro ASA |
| Aedas Homes vs. Penn National Gaming | Aedas Homes vs. DiamondRock Hospitality | Aedas Homes vs. Sabra Health Care | Aedas Homes vs. PENN NATL GAMING |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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