Correlation Between Penn National and WESTERN DIGITAL
Can any of the company-specific risk be diversified away by investing in both Penn National and WESTERN DIGITAL 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 WESTERN DIGITAL 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 WESTERN DIGITAL, you can compare the effects of market volatilities on Penn National and WESTERN DIGITAL 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 WESTERN DIGITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and WESTERN DIGITAL.
Diversification Opportunities for Penn National and WESTERN DIGITAL
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Penn and WESTERN is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and WESTERN DIGITAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN DIGITAL 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 WESTERN DIGITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN DIGITAL has no effect on the direction of Penn National i.e., Penn National and WESTERN DIGITAL go up and down completely randomly.
Pair Corralation between Penn National and WESTERN DIGITAL
Assuming the 90 days horizon Penn National is expected to generate 1.08 times less return on investment than WESTERN DIGITAL. In addition to that, Penn National is 1.03 times more volatile than WESTERN DIGITAL. It trades about 0.18 of its total potential returns per unit of risk. WESTERN DIGITAL is currently generating about 0.2 per unit of volatility. If you would invest 6,071 in WESTERN DIGITAL on September 2, 2024 and sell it today you would earn a total of 686.00 from holding WESTERN DIGITAL or generate 11.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. WESTERN DIGITAL
Performance |
| Timeline |
| Penn National Gaming |
| WESTERN DIGITAL |
Penn National and WESTERN DIGITAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and WESTERN DIGITAL
The main advantage of trading using opposite Penn National and WESTERN DIGITAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, WESTERN DIGITAL 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 WESTERN DIGITAL will offset losses from the drop in WESTERN DIGITAL's long position.| Penn National vs. Superior Plus Corp | Penn National vs. NMI Holdings | Penn National vs. Origin Agritech | Penn National vs. SIVERS SEMICONDUCTORS AB |
| WESTERN DIGITAL vs. Penn National Gaming | WESTERN DIGITAL vs. Tsingtao Brewery | WESTERN DIGITAL vs. The Boston Beer | WESTERN DIGITAL vs. Boyd Gaming |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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