Correlation Between Quaker Chemical and Penn National

Can any of the company-specific risk be diversified away by investing in both Quaker Chemical and Penn National 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 Quaker Chemical and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Quaker Chemical and Penn National Gaming, you can compare the effects of market volatilities on Quaker Chemical and Penn National 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 Quaker Chemical with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and Penn National.

Diversification Opportunities for Quaker Chemical and Penn National

0.76

Correlation Coefficient

Quaker Chemical  Penn National

Poor diversification

The 3 months correlation between Quaker and Penn is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National Gaming and Quaker Chemical 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 Quaker Chemical are associated (or correlated) with Penn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and Penn National go up and down completely randomly.

Pair Corralation between Quaker Chemical and Penn National

Assuming the 90 days horizon Quaker Chemical is expected to generate 1.04 times less return on investment than Penn National. But when comparing it to its historical volatility, Quaker Chemical is 1.08 times less risky than Penn National. It trades about 0.09 of its potential returns per unit of risk. Penn National Gaming is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,386  in Penn National Gaming on May 4, 2025 and sell it today you would earn a total of  195.00  from holding Penn National Gaming or generate 14.07% return on investment over 90 days.

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

Quaker Chemical  vs.  Penn National Gaming

Quaker Chemical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Quaker Chemical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Quaker Chemical reported solid returns over the last few months and may actually be approaching a breakup point.

Penn National Gaming

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Penn National reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quaker Chemical and Penn National

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

The idea behind Quaker Chemical and Penn National Gaming 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.