Correlation Between Penn National and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Penn National and Fast Retailing 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 Fast Retailing 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 Fast Retailing Co, you can compare the effects of market volatilities on Penn National and Fast Retailing 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 Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Fast Retailing.
Diversification Opportunities for Penn National and Fast Retailing
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Penn and Fast is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of Penn National i.e., Penn National and Fast Retailing go up and down completely randomly.
Pair Corralation between Penn National and Fast Retailing
Assuming the 90 days horizon Penn National Gaming is expected to generate 1.5 times more return on investment than Fast Retailing. However, Penn National is 1.5 times more volatile than Fast Retailing Co. It trades about 0.16 of its potential returns per unit of risk. Fast Retailing Co is currently generating about 0.13 per unit of risk. If you would invest 1,820 in Penn National Gaming on August 30, 2024 and sell it today you would earn a total of 188.00 from holding Penn National Gaming or generate 10.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. Fast Retailing Co
Performance |
| Timeline |
| Penn National Gaming |
| Fast Retailing |
Penn National and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Fast Retailing
The main advantage of trading using opposite Penn National and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.| Penn National vs. TRADEGATE | Penn National vs. Salesforce | Penn National vs. Sunstone Hotel Investors | Penn National vs. MIRAMAR HOTEL INV |
| Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing vs. Superior Plus Corp | Fast Retailing vs. SIVERS SEMICONDUCTORS AB |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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