Correlation Between Penn National and CBRE GROUP
Can any of the company-specific risk be diversified away by investing in both Penn National and CBRE GROUP 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 CBRE GROUP 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 CBRE GROUP A, you can compare the effects of market volatilities on Penn National and CBRE GROUP 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 CBRE GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and CBRE GROUP.
Diversification Opportunities for Penn National and CBRE GROUP
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Penn and CBRE is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and CBRE GROUP A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBRE GROUP A 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 CBRE GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBRE GROUP A has no effect on the direction of Penn National i.e., Penn National and CBRE GROUP go up and down completely randomly.
Pair Corralation between Penn National and CBRE GROUP
Assuming the 90 days horizon Penn National is expected to generate 2.94 times less return on investment than CBRE GROUP. In addition to that, Penn National is 1.76 times more volatile than CBRE GROUP A. It trades about 0.02 of its total potential returns per unit of risk. CBRE GROUP A is currently generating about 0.08 per unit of volatility. If you would invest 12,700 in CBRE GROUP A on September 12, 2024 and sell it today you would earn a total of 300.00 from holding CBRE GROUP A or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. CBRE GROUP A
Performance |
| Timeline |
| Penn National Gaming |
| CBRE GROUP A |
Penn National and CBRE GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and CBRE GROUP
The main advantage of trading using opposite Penn National and CBRE GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, CBRE GROUP 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 CBRE GROUP will offset losses from the drop in CBRE GROUP's long position.| Penn National vs. Sands China | Penn National vs. Superior Plus Corp | Penn National vs. SIVERS SEMICONDUCTORS AB | Penn National vs. Norsk Hydro ASA |
| CBRE GROUP vs. Entravision Communications | CBRE GROUP vs. Perdoceo Education | CBRE GROUP vs. Zoom Video Communications | CBRE GROUP vs. DEVRY EDUCATION GRP |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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