Correlation Between Penn National and Data#3
Can any of the company-specific risk be diversified away by investing in both Penn National and Data#3 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 Data#3 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 Data3 Limited, you can compare the effects of market volatilities on Penn National and Data#3 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 Data#3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Data#3.
Diversification Opportunities for Penn National and Data#3
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Penn and Data#3 is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Data3 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data3 Limited 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 Data#3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data3 Limited has no effect on the direction of Penn National i.e., Penn National and Data#3 go up and down completely randomly.
Pair Corralation between Penn National and Data#3
Assuming the 90 days horizon Penn National Gaming is expected to under-perform the Data#3. In addition to that, Penn National is 1.61 times more volatile than Data3 Limited. It trades about -0.01 of its total potential returns per unit of risk. Data3 Limited is currently generating about 0.0 per unit of volatility. If you would invest 474.00 in Data3 Limited on September 12, 2024 and sell it today you would lose (32.00) from holding Data3 Limited or give up 6.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. Data3 Limited
Performance |
| Timeline |
| Penn National Gaming |
| Data3 Limited |
Penn National and Data#3 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Data#3
The main advantage of trading using opposite Penn National and Data#3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Data#3 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 Data#3 will offset losses from the drop in Data#3's 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 |
| Data#3 vs. Cognizant Technology Solutions | Data#3 vs. Superior Plus Corp | Data#3 vs. SIVERS SEMICONDUCTORS AB | Data#3 vs. Norsk Hydro ASA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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