Correlation Between Penn National and Nokia
Can any of the company-specific risk be diversified away by investing in both Penn National and Nokia 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 Nokia 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 Nokia, you can compare the effects of market volatilities on Penn National and Nokia 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 Nokia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Nokia.
Diversification Opportunities for Penn National and Nokia
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Penn and Nokia is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Nokia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia 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 Nokia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia has no effect on the direction of Penn National i.e., Penn National and Nokia go up and down completely randomly.
Pair Corralation between Penn National and Nokia
Assuming the 90 days horizon Penn National is expected to generate 7.25 times less return on investment than Nokia. In addition to that, Penn National is 1.4 times more volatile than Nokia. It trades about 0.0 of its total potential returns per unit of risk. Nokia is currently generating about 0.03 per unit of volatility. If you would invest 342.00 in Nokia on September 4, 2024 and sell it today you would earn a total of 54.00 from holding Nokia or generate 15.79% 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. Nokia
Performance |
| Timeline |
| Penn National Gaming |
| Nokia |
Penn National and Nokia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Nokia
The main advantage of trading using opposite Penn National and Nokia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Nokia 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 Nokia will offset losses from the drop in Nokia's long position.| Penn National vs. CARSALESCOM | Penn National vs. Lery Seafood Group | Penn National vs. Dairy Farm International | Penn National vs. COMMERCIAL VEHICLE |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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