Correlation Between Penn National and NEXANS
Can any of the company-specific risk be diversified away by investing in both Penn National and NEXANS 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 NEXANS 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 NEXANS, you can compare the effects of market volatilities on Penn National and NEXANS 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 NEXANS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and NEXANS.
Diversification Opportunities for Penn National and NEXANS
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Penn and NEXANS is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and NEXANS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXANS 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 NEXANS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXANS has no effect on the direction of Penn National i.e., Penn National and NEXANS go up and down completely randomly.
Pair Corralation between Penn National and NEXANS
Assuming the 90 days horizon Penn National Gaming is expected to generate 3.18 times more return on investment than NEXANS. However, Penn National is 3.18 times more volatile than NEXANS. It trades about -0.06 of its potential returns per unit of risk. NEXANS is currently generating about -0.33 per unit of risk. If you would invest 1,900 in Penn National Gaming on October 10, 2024 and sell it today you would lose (89.00) from holding Penn National Gaming or give up 4.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Penn National Gaming vs. NEXANS
Performance |
| Timeline |
| Penn National Gaming |
| NEXANS |
Penn National and NEXANS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and NEXANS
The main advantage of trading using opposite Penn National and NEXANS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, NEXANS 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 NEXANS will offset losses from the drop in NEXANS's long position.| Penn National vs. United States Steel | Penn National vs. CALTAGIRONE EDITORE | Penn National vs. Mount Gibson Iron | Penn National vs. Nippon Steel |
| NEXANS vs. Hollywood Bowl Group | NEXANS vs. Grupo Carso SAB | NEXANS vs. PROSIEBENSAT1 MEDIADR4 | NEXANS vs. Penn National Gaming |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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