Correlation Between Penn National and Shenandoah Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Penn National and Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio 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 Shenandoah Telecommunications, you can compare the effects of market volatilities on Penn National and Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Shenandoah Telecommunicatio.
Diversification Opportunities for Penn National and Shenandoah Telecommunicatio
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Penn and Shenandoah is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of Penn National i.e., Penn National and Shenandoah Telecommunicatio go up and down completely randomly.
Pair Corralation between Penn National and Shenandoah Telecommunicatio
Assuming the 90 days horizon Penn National Gaming is expected to generate 1.8 times more return on investment than Shenandoah Telecommunicatio. However, Penn National is 1.8 times more volatile than Shenandoah Telecommunications. It trades about 0.14 of its potential returns per unit of risk. Shenandoah Telecommunications is currently generating about -0.34 per unit of risk. If you would invest 1,775 in Penn National Gaming on October 30, 2024 and sell it today you would earn a total of 143.00 from holding Penn National Gaming or generate 8.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Penn National Gaming vs. Shenandoah Telecommunications
Performance |
| Timeline |
| Penn National Gaming |
| Shenandoah Telecommunicatio |
Penn National and Shenandoah Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Shenandoah Telecommunicatio
The main advantage of trading using opposite Penn National and Shenandoah Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio will offset losses from the drop in Shenandoah Telecommunicatio's long position.| Penn National vs. TFS FINANCIAL | Penn National vs. SWISS WATER DECAFFCOFFEE | Penn National vs. BIOPHARMA CREDIT DL | Penn National vs. CITIC Telecom International |
| Shenandoah Telecommunicatio vs. AEON STORES | Shenandoah Telecommunicatio vs. UNIQA INSURANCE GR | Shenandoah Telecommunicatio vs. BJs Restaurants | Shenandoah Telecommunicatio vs. BANK OF CHINA |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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