Correlation Between PENN NATL and Evolution Mining

Can any of the company-specific risk be diversified away by investing in both PENN NATL and Evolution Mining 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 Evolution Mining 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 Evolution Mining Limited, you can compare the effects of market volatilities on PENN NATL and Evolution Mining 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 Evolution Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and Evolution Mining.

Diversification Opportunities for PENN NATL and Evolution Mining

0.37

Correlation Coefficient

PENN NATL  Evolution Mining

Weak diversification

The 3 months correlation between PENN and Evolution is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and Evolution Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of PENN NATL i.e., PENN NATL and Evolution Mining go up and down completely randomly.

Pair Corralation between PENN NATL and Evolution Mining

Assuming the 90 days trading horizon PENN NATL is expected to generate 4.26 times less return on investment than Evolution Mining. In addition to that, PENN NATL is 1.12 times more volatile than Evolution Mining Limited. It trades about 0.03 of its total potential returns per unit of risk. Evolution Mining Limited is currently generating about 0.14 per unit of volatility. If you would invest  265.00  in Evolution Mining Limited on September 14, 2024 and sell it today you would earn a total of  52.00  from holding Evolution Mining Limited or generate 19.62% return on investment over 90 days.

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

PENN NATL GAMING  vs.  Evolution Mining Limited

PENN NATL GAMING

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PENN NATL GAMING are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PENN NATL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Evolution Mining

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Evolution Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PENN NATL and Evolution Mining

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

The idea behind PENN NATL GAMING and Evolution Mining Limited 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.