Correlation Between PENN NATL and Corporate Travel

Can any of the company-specific risk be diversified away by investing in both PENN NATL and Corporate Travel 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 NATL and Corporate Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PENN NATL GAMING and Corporate Travel Management, you can compare the effects of market volatilities on PENN NATL and Corporate Travel 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 NATL with a short position of Corporate Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and Corporate Travel.

Diversification Opportunities for PENN NATL and Corporate Travel

0.63

Correlation Coefficient

PENN NATL  Corporate Travel

Poor diversification

The 3 months correlation between PENN and Corporate is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and Corporate Travel Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Travel Man and PENN NATL 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 NATL GAMING are associated (or correlated) with Corporate Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Travel Man has no effect on the direction of PENN NATL i.e., PENN NATL and Corporate Travel go up and down completely randomly.

Pair Corralation between PENN NATL and Corporate Travel

Assuming the 90 days trading horizon PENN NATL GAMING is expected to under-perform the Corporate Travel. In addition to that, PENN NATL is 1.37 times more volatile than Corporate Travel Management. It trades about -0.18 of its total potential returns per unit of risk. Corporate Travel Management is currently generating about -0.18 per unit of volatility. If you would invest  835.00  in Corporate Travel Management on September 27, 2024 and sell it today you would lose (70.00) from holding Corporate Travel Management or give up 8.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

PENN NATL GAMING  vs.  Corporate Travel Management

PENN NATL GAMING

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PENN NATL GAMING are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, PENN NATL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Corporate Travel Man

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corporate Travel Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Corporate Travel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PENN NATL and Corporate Travel

The main advantage of trading using opposite PENN NATL and Corporate Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN NATL position performs unexpectedly, Corporate Travel 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 Corporate Travel will offset losses from the drop in Corporate Travel's long position.

The idea behind PENN NATL GAMING and Corporate Travel Management pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..