Correlation Between Penn National and CASTA DIVA
Can any of the company-specific risk be diversified away by investing in both Penn National and CASTA DIVA 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 National and CASTA DIVA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penn National Gaming and CASTA DIVA GROUP, you can compare the effects of market volatilities on Penn National and CASTA DIVA 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 National with a short position of CASTA DIVA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and CASTA DIVA.
Diversification Opportunities for Penn National and CASTA DIVA
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Penn and CASTA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and CASTA DIVA GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CASTA DIVA GROUP and Penn National 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 National Gaming are associated (or correlated) with CASTA DIVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CASTA DIVA GROUP has no effect on the direction of Penn National i.e., Penn National and CASTA DIVA go up and down completely randomly.
Pair Corralation between Penn National and CASTA DIVA
Assuming the 90 days horizon Penn National is expected to generate 1.72 times less return on investment than CASTA DIVA. But when comparing it to its historical volatility, Penn National Gaming is 1.06 times less risky than CASTA DIVA. It trades about 0.07 of its potential returns per unit of risk. CASTA DIVA GROUP is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 97.00 in CASTA DIVA GROUP on September 17, 2024 and sell it today you would earn a total of 20.00 from holding CASTA DIVA GROUP or generate 20.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Penn National Gaming vs. CASTA DIVA GROUP
Performance |
Timeline |
Penn National Gaming |
CASTA DIVA GROUP |
Penn National and CASTA DIVA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Penn National and CASTA DIVA
The main advantage of trading using opposite Penn National and CASTA DIVA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, CASTA DIVA 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 CASTA DIVA will offset losses from the drop in CASTA DIVA's long position.Penn National vs. Superior Plus Corp | Penn National vs. SIVERS SEMICONDUCTORS AB | Penn National vs. Norsk Hydro ASA | Penn National vs. Reliance Steel Aluminum |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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