Correlation Between Penn National and Scientific Games
Can any of the company-specific risk be diversified away by investing in both Penn National and Scientific Games 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 Scientific Games 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 Scientific Games, you can compare the effects of market volatilities on Penn National and Scientific Games 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 Scientific Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Scientific Games.
Diversification Opportunities for Penn National and Scientific Games
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Penn and Scientific is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Scientific Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientific Games 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 Scientific Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientific Games has no effect on the direction of Penn National i.e., Penn National and Scientific Games go up and down completely randomly.
Pair Corralation between Penn National and Scientific Games
Assuming the 90 days horizon Penn National is expected to generate 1.08 times less return on investment than Scientific Games. But when comparing it to its historical volatility, Penn National Gaming is 1.03 times less risky than Scientific Games. It trades about 0.11 of its potential returns per unit of risk. Scientific Games is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 8,550 in Scientific Games on September 1, 2024 and sell it today you would earn a total of 550.00 from holding Scientific Games or generate 6.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. Scientific Games
Performance |
| Timeline |
| Penn National Gaming |
| Scientific Games |
Penn National and Scientific Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Scientific Games
The main advantage of trading using opposite Penn National and Scientific Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Scientific Games 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 Scientific Games will offset losses from the drop in Scientific Games' long position.| Penn National vs. WESTLAKE CHEMICAL | Penn National vs. Marie Brizard Wine | Penn National vs. NorAm Drilling AS | Penn National vs. SEKISUI CHEMICAL |
| Scientific Games vs. InterContinental Hotels Group | Scientific Games vs. Marie Brizard Wine | Scientific Games vs. Hyatt Hotels | Scientific Games vs. HYATT HOTELS A |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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