Correlation Between Penn National and Grand Canyon
Can any of the company-specific risk be diversified away by investing in both Penn National and Grand Canyon 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 Grand Canyon 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 Grand Canyon Education, you can compare the effects of market volatilities on Penn National and Grand Canyon 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 Grand Canyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Grand Canyon.
Diversification Opportunities for Penn National and Grand Canyon
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Penn and Grand is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Grand Canyon Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canyon Education 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 Grand Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canyon Education has no effect on the direction of Penn National i.e., Penn National and Grand Canyon go up and down completely randomly.
Pair Corralation between Penn National and Grand Canyon
Assuming the 90 days horizon Penn National Gaming is expected to generate 2.94 times more return on investment than Grand Canyon. However, Penn National is 2.94 times more volatile than Grand Canyon Education. It trades about 0.02 of its potential returns per unit of risk. Grand Canyon Education is currently generating about -0.14 per unit of risk. If you would invest 1,871 in Penn National Gaming on October 11, 2024 and sell it today you would earn a total of 5.00 from holding Penn National Gaming or generate 0.27% 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. Grand Canyon Education
Performance |
| Timeline |
| Penn National Gaming |
| Grand Canyon Education |
Penn National and Grand Canyon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Grand Canyon
The main advantage of trading using opposite Penn National and Grand Canyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Grand Canyon 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 Grand Canyon will offset losses from the drop in Grand Canyon's long position.| Penn National vs. THRACE PLASTICS | Penn National vs. AM EAGLE OUTFITTERS | Penn National vs. NEWELL RUBBERMAID | Penn National vs. VIENNA INSURANCE GR |
| Grand Canyon vs. Media and Games | Grand Canyon vs. Penn National Gaming | Grand Canyon vs. ELMOS SEMICONDUCTOR | Grand Canyon vs. NXP Semiconductors NV |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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