Correlation Between Penn National and Games Workshop

Can any of the company-specific risk be diversified away by investing in both Penn National and Games Workshop 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 Games Workshop 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 Games Workshop Group, you can compare the effects of market volatilities on Penn National and Games Workshop 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 Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Games Workshop.

Diversification Opportunities for Penn National and Games Workshop

0.79

Correlation Coefficient

Penn National  Games Workshop

Poor diversification

The 3 months correlation between Penn and Games is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Games Workshop Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Games Workshop 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 Games Workshop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Games Workshop Group has no effect on the direction of Penn National i.e., Penn National and Games Workshop go up and down completely randomly.

Pair Corralation between Penn National and Games Workshop

Assuming the 90 days horizon Penn National Gaming is expected to under-perform the Games Workshop. In addition to that, Penn National is 1.6 times more volatile than Games Workshop Group. It trades about -0.01 of its total potential returns per unit of risk. Games Workshop Group is currently generating about 0.08 per unit of volatility. If you would invest  11,401  in Games Workshop Group on September 13, 2024 and sell it today you would earn a total of  5,499  from holding Games Workshop Group or generate 48.23% return on investment over 90 days.

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

Penn National Gaming  vs.  Games Workshop Group

Penn National Gaming

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Penn National reported solid returns over the last few months and may actually be approaching a breakup point.

Games Workshop Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Games Workshop unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penn National and Games Workshop

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

The idea behind Penn National Gaming and Games Workshop Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.