Correlation Between Penn National and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Penn National and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on Penn National and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and SMA Solar.
Diversification Opportunities for Penn National and SMA Solar
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Penn and SMA is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Penn National i.e., Penn National and SMA Solar go up and down completely randomly.
Pair Corralation between Penn National and SMA Solar
Assuming the 90 days horizon Penn National Gaming is expected to under-perform the SMA Solar. But the stock apears to be less risky and, when comparing its historical volatility, Penn National Gaming is 1.72 times less risky than SMA Solar. The stock trades about 0.0 of its potential returns per unit of risk. The SMA Solar Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,762 in SMA Solar Technology on December 25, 2024 and sell it today you would earn a total of 342.00 from holding SMA Solar Technology or generate 19.41% 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. SMA Solar Technology
Performance |
| Timeline |
| Penn National Gaming |
| SMA Solar Technology |
Penn National and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and SMA Solar
The main advantage of trading using opposite Penn National and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Penn National vs. Tower One Wireless | Penn National vs. Spirent Communications plc | Penn National vs. MAVEN WIRELESS SWEDEN | Penn National vs. SmarTone Telecommunications Holdings |
| SMA Solar vs. AGF Management Limited | SMA Solar vs. NORDHEALTH AS NK | SMA Solar vs. Planet Fitness | SMA Solar vs. Molina Healthcare |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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