Correlation Between Penn National and UNITED UTILITIES
Can any of the company-specific risk be diversified away by investing in both Penn National and UNITED UTILITIES 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 UNITED UTILITIES 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 UNITED UTILITIES GR, you can compare the effects of market volatilities on Penn National and UNITED UTILITIES 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 UNITED UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and UNITED UTILITIES.
Diversification Opportunities for Penn National and UNITED UTILITIES
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Penn and UNITED is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and UNITED UTILITIES GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED UTILITIES 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 UNITED UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED UTILITIES has no effect on the direction of Penn National i.e., Penn National and UNITED UTILITIES go up and down completely randomly.
Pair Corralation between Penn National and UNITED UTILITIES
Assuming the 90 days horizon Penn National Gaming is expected to generate 2.44 times more return on investment than UNITED UTILITIES. However, Penn National is 2.44 times more volatile than UNITED UTILITIES GR. It trades about 0.02 of its potential returns per unit of risk. UNITED UTILITIES GR is currently generating about 0.03 per unit of risk. If you would invest 1,722 in Penn National Gaming on September 22, 2024 and sell it today you would earn a total of 62.00 from holding Penn National Gaming or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. UNITED UTILITIES GR
Performance |
| Timeline |
| Penn National Gaming |
| UNITED UTILITIES |
Penn National and UNITED UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and UNITED UTILITIES
The main advantage of trading using opposite Penn National and UNITED UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, UNITED UTILITIES 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 UNITED UTILITIES will offset losses from the drop in UNITED UTILITIES's long position.| Penn National vs. Las Vegas Sands | Penn National vs. Galaxy Entertainment Group | Penn National vs. Sands China | Penn National vs. MGM Resorts International |
| UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Apple Inc |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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