Correlation Between WGHT WTCHER and PENN NATL
Can any of the company-specific risk be diversified away by investing in both WGHT WTCHER and PENN NATL 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 WGHT WTCHER and PENN NATL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WGHT WTCHER INTL and PENN NATL GAMING, you can compare the effects of market volatilities on WGHT WTCHER and PENN NATL 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 WGHT WTCHER with a short position of PENN NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of WGHT WTCHER and PENN NATL.
Diversification Opportunities for WGHT WTCHER and PENN NATL
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between WGHT and PENN is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding WGHT WTCHER INTL and PENN NATL GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN NATL GAMING and WGHT WTCHER 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 WGHT WTCHER INTL are associated (or correlated) with PENN NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN NATL GAMING has no effect on the direction of WGHT WTCHER i.e., WGHT WTCHER and PENN NATL go up and down completely randomly.
Pair Corralation between WGHT WTCHER and PENN NATL
Assuming the 90 days trading horizon WGHT WTCHER INTL is expected to generate 4.08 times more return on investment than PENN NATL. However, WGHT WTCHER is 4.08 times more volatile than PENN NATL GAMING. It trades about 0.03 of its potential returns per unit of risk. PENN NATL GAMING is currently generating about 0.09 per unit of risk. If you would invest 140.00 in WGHT WTCHER INTL on September 3, 2024 and sell it today you would lose (28.00) from holding WGHT WTCHER INTL or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WGHT WTCHER INTL vs. PENN NATL GAMING
Performance |
| Timeline |
| WGHT WTCHER INTL |
| PENN NATL GAMING |
WGHT WTCHER and PENN NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WGHT WTCHER and PENN NATL
The main advantage of trading using opposite WGHT WTCHER and PENN NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WGHT WTCHER position performs unexpectedly, PENN NATL 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 NATL will offset losses from the drop in PENN NATL's long position.| WGHT WTCHER vs. Take Two Interactive Software | WGHT WTCHER vs. CARSALESCOM | WGHT WTCHER vs. ASURE SOFTWARE | WGHT WTCHER vs. USU Software AG |
| PENN NATL vs. NTG Nordic Transport | PENN NATL vs. ARISTOCRAT LEISURE | PENN NATL vs. PARKEN Sport Entertainment | PENN NATL vs. USWE SPORTS AB |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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