Correlation Between PennantPark Investment and COSTCO WHOLESALE

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

By analyzing existing cross correlation between PennantPark Investment and COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on PennantPark Investment and COSTCO WHOLESALE 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 COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and COSTCO WHOLESALE.

Diversification Opportunities for PennantPark Investment and COSTCO WHOLESALE

0.14

Correlation Coefficient

PennantPark Investment  COSTCO WHOLESALE

Average diversification

The 3 months correlation between PennantPark and COSTCO is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR 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 COSTCO WHOLESALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTCO WHOLESALE CDR has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and COSTCO WHOLESALE go up and down completely randomly.

Pair Corralation between PennantPark Investment and COSTCO WHOLESALE

Assuming the 90 days horizon PennantPark Investment is expected to generate 1.57 times more return on investment than COSTCO WHOLESALE. However, PennantPark Investment is 1.57 times more volatile than COSTCO WHOLESALE CDR. It trades about 0.19 of its potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.01 per unit of risk. If you would invest  653.00  in PennantPark Investment on October 23, 2024 and sell it today you would earn a total of  43.00  from holding PennantPark Investment or generate 6.58% return on investment over 90 days.

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

PennantPark Investment  vs.  COSTCO WHOLESALE CDR

PennantPark Investment

Risk-Adjusted Performance

8 of 100

OK

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

COSTCO WHOLESALE CDR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COSTCO WHOLESALE CDR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COSTCO WHOLESALE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PennantPark Investment and COSTCO WHOLESALE

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

The idea behind PennantPark Investment and COSTCO WHOLESALE CDR 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.