Correlation Between Penn National and Gaztransport Technigaz
Can any of the company-specific risk be diversified away by investing in both Penn National and Gaztransport Technigaz 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 Gaztransport Technigaz 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 Gaztransport Technigaz SA, you can compare the effects of market volatilities on Penn National and Gaztransport Technigaz 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 Gaztransport Technigaz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Gaztransport Technigaz.
Diversification Opportunities for Penn National and Gaztransport Technigaz
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Penn and Gaztransport is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Gaztransport Technigaz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport Technigaz 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 Gaztransport Technigaz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport Technigaz has no effect on the direction of Penn National i.e., Penn National and Gaztransport Technigaz go up and down completely randomly.
Pair Corralation between Penn National and Gaztransport Technigaz
Assuming the 90 days horizon Penn National Gaming is expected to generate 1.71 times more return on investment than Gaztransport Technigaz. However, Penn National is 1.71 times more volatile than Gaztransport Technigaz SA. It trades about 0.09 of its potential returns per unit of risk. Gaztransport Technigaz SA is currently generating about 0.04 per unit of risk. If you would invest 1,496 in Penn National Gaming on September 3, 2024 and sell it today you would earn a total of 488.00 from holding Penn National Gaming or generate 32.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. Gaztransport Technigaz SA
Performance |
| Timeline |
| Penn National Gaming |
| Gaztransport Technigaz |
Penn National and Gaztransport Technigaz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Gaztransport Technigaz
The main advantage of trading using opposite Penn National and Gaztransport Technigaz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Gaztransport Technigaz 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 Gaztransport Technigaz will offset losses from the drop in Gaztransport Technigaz's long position.| Penn National vs. CHINA TONTINE WINES | Penn National vs. Ross Stores | Penn National vs. RETAIL FOOD GROUP | Penn National 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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