Correlation Between Penn National and Carlsberg
Can any of the company-specific risk be diversified away by investing in both Penn National and Carlsberg 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 Carlsberg 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 Carlsberg AS, you can compare the effects of market volatilities on Penn National and Carlsberg 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 Carlsberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Carlsberg.
Diversification Opportunities for Penn National and Carlsberg
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Penn and Carlsberg is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS 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 Carlsberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg AS has no effect on the direction of Penn National i.e., Penn National and Carlsberg go up and down completely randomly.
Pair Corralation between Penn National and Carlsberg
Assuming the 90 days horizon Penn National is expected to generate 90.22 times less return on investment than Carlsberg. In addition to that, Penn National is 1.7 times more volatile than Carlsberg AS. It trades about 0.0 of its total potential returns per unit of risk. Carlsberg AS is currently generating about 0.04 per unit of volatility. If you would invest 8,367 in Carlsberg AS on November 19, 2024 and sell it today you would earn a total of 3,088 from holding Carlsberg AS or generate 36.91% 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. Carlsberg AS
Performance |
| Timeline |
| Penn National Gaming |
| Carlsberg AS |
Penn National and Carlsberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Carlsberg
The main advantage of trading using opposite Penn National and Carlsberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Carlsberg 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 Carlsberg will offset losses from the drop in Carlsberg's long position.| Penn National vs. AEGEAN AIRLINES | Penn National vs. United Airlines Holdings | Penn National vs. PLANT VEDA FOODS | Penn National vs. Thai Beverage Public |
| Carlsberg vs. KIMBALL ELECTRONICS | Carlsberg vs. Uber Technologies | Carlsberg vs. Nucletron Electronic Aktiengesellschaft | Carlsberg vs. Firan Technology Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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