Correlation Between Red Rock and Penn National
Can any of the company-specific risk be diversified away by investing in both Red Rock and Penn National 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 Red Rock and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Rock Resorts and Penn National Gaming, you can compare the effects of market volatilities on Red Rock and Penn National 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 Red Rock with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Rock and Penn National.
Diversification Opportunities for Red Rock and Penn National
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Red and Penn is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Red Rock Resorts and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National Gaming and Red Rock 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 Red Rock Resorts are associated (or correlated) with Penn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of Red Rock i.e., Red Rock and Penn National go up and down completely randomly.
Pair Corralation between Red Rock and Penn National
Considering the 90-day investment horizon Red Rock Resorts is expected to under-perform the Penn National. But the stock apears to be less risky and, when comparing its historical volatility, Red Rock Resorts is 1.13 times less risky than Penn National. The stock trades about -0.12 of its potential returns per unit of risk. The Penn National Gaming is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,989 in Penn National Gaming on August 28, 2024 and sell it today you would earn a total of 128.00 from holding Penn National Gaming or generate 6.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Rock Resorts vs. Penn National Gaming
Performance |
| Timeline |
| Red Rock Resorts |
| Penn National Gaming |
Red Rock and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Rock and Penn National
The main advantage of trading using opposite Red Rock and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Rock position performs unexpectedly, Penn National 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 Penn National will offset losses from the drop in Penn National's long position.| Red Rock vs. Golden Entertainment | Red Rock vs. Century Casinos | Red Rock vs. Studio City International | Red Rock vs. Ballys Corp |
| Penn National vs. DraftKings | Penn National vs. MGM Resorts International | Penn National vs. Caesars Entertainment | Penn National 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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