Correlation Between PennantPark Investment and Sunrun

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

By analyzing existing cross correlation between PennantPark Investment and Sunrun Inc, you can compare the effects of market volatilities on PennantPark Investment and Sunrun 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 PennantPark Investment with a short position of Sunrun. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Sunrun.

Diversification Opportunities for PennantPark Investment and Sunrun

0.28

Correlation Coefficient

PennantPark Investment  Sunrun

Modest diversification

The 3 months correlation between PennantPark and Sunrun is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Sunrun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrun Inc and PennantPark Investment 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 PennantPark Investment are associated (or correlated) with Sunrun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunrun Inc has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Sunrun go up and down completely randomly.

Pair Corralation between PennantPark Investment and Sunrun

Assuming the 90 days horizon PennantPark Investment is expected to generate 0.4 times more return on investment than Sunrun. However, PennantPark Investment is 2.48 times less risky than Sunrun. It trades about 0.03 of its potential returns per unit of risk. Sunrun Inc is currently generating about -0.17 per unit of risk. If you would invest  641.00  in PennantPark Investment on December 30, 2024 and sell it today you would earn a total of  19.00  from holding PennantPark Investment or generate 2.96% return on investment over 90 days.

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

PennantPark Investment  vs.  Sunrun Inc

PennantPark Investment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PennantPark Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sunrun Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunrun Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PennantPark Investment and Sunrun

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

The idea behind PennantPark Investment and Sunrun Inc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.