Correlation Between Penn National and Universal Entertainment
Can any of the company-specific risk be diversified away by investing in both Penn National and Universal Entertainment 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 Universal Entertainment 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 Universal Entertainment, you can compare the effects of market volatilities on Penn National and Universal Entertainment 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 Universal Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Universal Entertainment.
Diversification Opportunities for Penn National and Universal Entertainment
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Penn and Universal is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Universal Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Entertainment 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 Universal Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Entertainment has no effect on the direction of Penn National i.e., Penn National and Universal Entertainment go up and down completely randomly.
Pair Corralation between Penn National and Universal Entertainment
Assuming the 90 days horizon Penn National Gaming is expected to generate 0.51 times more return on investment than Universal Entertainment. However, Penn National Gaming is 1.96 times less risky than Universal Entertainment. It trades about 0.21 of its potential returns per unit of risk. Universal Entertainment is currently generating about -0.11 per unit of risk. If you would invest 1,771 in Penn National Gaming on September 4, 2024 and sell it today you would earn a total of 213.00 from holding Penn National Gaming or generate 12.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. Universal Entertainment
Performance |
| Timeline |
| Penn National Gaming |
| Universal Entertainment |
Penn National and Universal Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Universal Entertainment
The main advantage of trading using opposite Penn National and Universal Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Universal Entertainment 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 Universal Entertainment will offset losses from the drop in Universal Entertainment's long position.| Penn National vs. CARSALESCOM | Penn National vs. Lery Seafood Group | Penn National vs. Dairy Farm International | Penn National vs. COMMERCIAL VEHICLE |
| Universal Entertainment vs. TOTAL GABON | Universal Entertainment vs. Walgreens Boots Alliance | Universal Entertainment vs. Peak Resources Limited |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |