Correlation Between Penn National and ECHO INVESTMENT

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

Diversification Opportunities for Penn National and ECHO INVESTMENT

0.81

Correlation Coefficient

Penn National  ECHO INVESTMENT

Very poor diversification

The 3 months correlation between Penn and ECHO is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY 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 ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of Penn National i.e., Penn National and ECHO INVESTMENT go up and down completely randomly.

Pair Corralation between Penn National and ECHO INVESTMENT

Assuming the 90 days horizon Penn National Gaming is expected to generate 1.75 times more return on investment than ECHO INVESTMENT. However, Penn National is 1.75 times more volatile than ECHO INVESTMENT ZY. It trades about 0.11 of its potential returns per unit of risk. ECHO INVESTMENT ZY is currently generating about 0.12 per unit of risk. If you would invest  1,260  in Penn National Gaming on April 20, 2025 and sell it today you would earn a total of  245.00  from holding Penn National Gaming or generate 19.44% return on investment over 90 days.

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

Penn National Gaming  vs.  ECHO INVESTMENT ZY

Penn National Gaming

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Penn National reported solid returns over the last few months and may actually be approaching a breakup point.

ECHO INVESTMENT ZY

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ECHO INVESTMENT ZY are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ECHO INVESTMENT may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Penn National and ECHO INVESTMENT

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

The idea behind Penn National Gaming and ECHO INVESTMENT ZY 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.