Correlation Between Penn National and Dave Busters
Can any of the company-specific risk be diversified away by investing in both Penn National and Dave Busters 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 Dave Busters 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 Dave Busters Entertainment, you can compare the effects of market volatilities on Penn National and Dave Busters 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 Dave Busters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Dave Busters.
Diversification Opportunities for Penn National and Dave Busters
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Penn and Dave is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Dave Busters Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Busters Enterta 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 Dave Busters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Busters Enterta has no effect on the direction of Penn National i.e., Penn National and Dave Busters go up and down completely randomly.
Pair Corralation between Penn National and Dave Busters
Assuming the 90 days horizon Penn National Gaming is expected to generate 0.86 times more return on investment than Dave Busters. However, Penn National Gaming is 1.16 times less risky than Dave Busters. It trades about 0.02 of its potential returns per unit of risk. Dave Busters Entertainment is currently generating about -0.06 per unit of risk. If you would invest 1,896 in Penn National Gaming on September 12, 2024 and sell it today you would earn a total of 4.00 from holding Penn National Gaming or generate 0.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. Dave Busters Entertainment
Performance |
| Timeline |
| Penn National Gaming |
| Dave Busters Enterta |
Penn National and Dave Busters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Dave Busters
The main advantage of trading using opposite Penn National and Dave Busters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Dave Busters 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 Dave Busters will offset losses from the drop in Dave Busters' 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 |
| Dave Busters vs. REVO INSURANCE SPA | Dave Busters vs. JSC Halyk bank | Dave Busters vs. The Hanover Insurance | Dave Busters vs. Jupiter Fund Management |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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