Correlation Between Penn National and Apple
Can any of the company-specific risk be diversified away by investing in both Penn National and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on Penn National and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Apple.
Diversification Opportunities for Penn National and Apple
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Penn and Apple is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Penn National i.e., Penn National and Apple go up and down completely randomly.
Pair Corralation between Penn National and Apple
Assuming the 90 days horizon Penn National Gaming is expected to generate 1.98 times more return on investment than Apple. However, Penn National is 1.98 times more volatile than Apple Inc. It trades about 0.12 of its potential returns per unit of risk. Apple Inc is currently generating about 0.1 per unit of risk. If you would invest 1,660 in Penn National Gaming on September 2, 2024 and sell it today you would earn a total of 324.00 from holding Penn National Gaming or generate 19.52% 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. Apple Inc
Performance |
| Timeline |
| Penn National Gaming |
| Apple Inc |
Penn National and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Apple
The main advantage of trading using opposite Penn National and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Penn National vs. Superior Plus Corp | Penn National vs. NMI Holdings | Penn National vs. Origin Agritech | Penn National vs. SIVERS SEMICONDUCTORS AB |
| Apple vs. United Airlines Holdings | Apple vs. URBAN OUTFITTERS | Apple vs. Aegean Airlines SA | Apple vs. American Eagle Outfitters |
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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