Correlation Between Penn National and Wayside Technology
Can any of the company-specific risk be diversified away by investing in both Penn National and Wayside Technology 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 Wayside Technology 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 Wayside Technology Group, you can compare the effects of market volatilities on Penn National and Wayside Technology 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 Wayside Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Wayside Technology.
Diversification Opportunities for Penn National and Wayside Technology
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Penn and Wayside is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Wayside Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayside Technology 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 Wayside Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayside Technology has no effect on the direction of Penn National i.e., Penn National and Wayside Technology go up and down completely randomly.
Pair Corralation between Penn National and Wayside Technology
Assuming the 90 days horizon Penn National Gaming is expected to generate 1.8 times more return on investment than Wayside Technology. However, Penn National is 1.8 times more volatile than Wayside Technology Group. It trades about 0.11 of its potential returns per unit of risk. Wayside Technology Group is currently generating about 0.2 per unit of risk. If you would invest 1,775 in Penn National Gaming on October 29, 2024 and sell it today you would earn a total of 112.00 from holding Penn National Gaming or generate 6.31% 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. Wayside Technology Group
Performance |
| Timeline |
| Penn National Gaming |
| Wayside Technology |
Penn National and Wayside Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Wayside Technology
The main advantage of trading using opposite Penn National and Wayside Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Wayside Technology 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 Wayside Technology will offset losses from the drop in Wayside Technology's long position.| Penn National vs. Las Vegas Sands | Penn National vs. Galaxy Entertainment Group | Penn National vs. Sands China | Penn National vs. MGM Resorts International |
| Wayside Technology vs. Sekisui Chemical Co | Wayside Technology vs. Sanyo Chemical Industries | Wayside Technology vs. Southwest Airlines Co | Wayside Technology vs. Nok Airlines PCL |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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