Correlation Between Penn National and GAMESTOP
Can any of the company-specific risk be diversified away by investing in both Penn National and GAMESTOP 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 GAMESTOP 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 GAMESTOP, you can compare the effects of market volatilities on Penn National and GAMESTOP 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 GAMESTOP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and GAMESTOP.
Diversification Opportunities for Penn National and GAMESTOP
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Penn and GAMESTOP is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and GAMESTOP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMESTOP 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 GAMESTOP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMESTOP has no effect on the direction of Penn National i.e., Penn National and GAMESTOP go up and down completely randomly.
Pair Corralation between Penn National and GAMESTOP
Assuming the 90 days horizon Penn National is expected to generate 3.27 times less return on investment than GAMESTOP. But when comparing it to its historical volatility, Penn National Gaming is 1.24 times less risky than GAMESTOP. It trades about 0.06 of its potential returns per unit of risk. GAMESTOP is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,080 in GAMESTOP on October 26, 2024 and sell it today you would earn a total of 712.00 from holding GAMESTOP or generate 34.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. GAMESTOP
Performance |
| Timeline |
| Penn National Gaming |
| GAMESTOP |
Penn National and GAMESTOP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and GAMESTOP
The main advantage of trading using opposite Penn National and GAMESTOP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, GAMESTOP 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 GAMESTOP will offset losses from the drop in GAMESTOP's long position.| Penn National vs. Spirent Communications plc | Penn National vs. SCOTT TECHNOLOGY | Penn National vs. Direct Line Insurance | Penn National vs. Vishay Intertechnology |
| GAMESTOP vs. Salesforce | GAMESTOP vs. ZhongAn Online P | GAMESTOP vs. PLAYMATES TOYS | GAMESTOP vs. GungHo Online Entertainment |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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