Correlation Between Penn National and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Penn National and Burlington Stores 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 Burlington Stores 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 Burlington Stores, you can compare the effects of market volatilities on Penn National and Burlington Stores 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 Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Burlington Stores.
Diversification Opportunities for Penn National and Burlington Stores
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Penn and Burlington is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores 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 Burlington Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burlington Stores has no effect on the direction of Penn National i.e., Penn National and Burlington Stores go up and down completely randomly.
Pair Corralation between Penn National and Burlington Stores
Assuming the 90 days horizon Penn National Gaming is expected to generate 2.22 times more return on investment than Burlington Stores. However, Penn National is 2.22 times more volatile than Burlington Stores. It trades about 0.2 of its potential returns per unit of risk. Burlington Stores is currently generating about -0.08 per unit of risk. If you would invest 1,781 in Penn National Gaming on October 25, 2024 and sell it today you would earn a total of 192.00 from holding Penn National Gaming or generate 10.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. Burlington Stores
Performance |
| Timeline |
| Penn National Gaming |
| Burlington Stores |
Penn National and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Burlington Stores
The main advantage of trading using opposite Penn National and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Burlington Stores 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 Burlington Stores will offset losses from the drop in Burlington Stores' long position.| Penn National vs. Nufarm Limited | Penn National vs. TITAN MACHINERY | Penn National vs. DAIRY FARM INTL | Penn National vs. Tokyu Construction Co |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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