Correlation Between Universal Entertainment and Penn National
Can any of the company-specific risk be diversified away by investing in both Universal Entertainment 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 Universal Entertainment and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Entertainment and Penn National Gaming, you can compare the effects of market volatilities on Universal Entertainment 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 Universal Entertainment with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Entertainment and Penn National.
Diversification Opportunities for Universal Entertainment and Penn National
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Universal and Penn is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Universal Entertainment 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 Universal Entertainment 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 Universal Entertainment 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 Universal Entertainment i.e., Universal Entertainment and Penn National go up and down completely randomly.
Pair Corralation between Universal Entertainment and Penn National
Assuming the 90 days trading horizon Universal Entertainment is expected to under-perform the Penn National. In addition to that, Universal Entertainment is 2.16 times more volatile than Penn National Gaming. It trades about -0.1 of its total potential returns per unit of risk. Penn National Gaming is currently generating about 0.02 per unit of volatility. If you would invest 1,896 in Penn National Gaming on September 12, 2024 and sell it today you would earn a total of 4.00 from holding Penn National Gaming or generate 0.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Entertainment vs. Penn National Gaming
Performance |
| Timeline |
| Universal Entertainment |
| Penn National Gaming |
Universal Entertainment and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Entertainment and Penn National
The main advantage of trading using opposite Universal Entertainment and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Entertainment 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.| Universal Entertainment vs. Apple Inc | Universal Entertainment vs. Apple Inc | Universal Entertainment vs. Apple Inc | Universal Entertainment vs. Apple Inc |
| Penn National vs. Sands China | Penn National vs. Superior Plus Corp | Penn National vs. SIVERS SEMICONDUCTORS AB | Penn National vs. Norsk Hydro ASA |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |