Correlation Between PennantPark Investment and NORWEGIAN AIR

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

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

Diversification Opportunities for PennantPark Investment and NORWEGIAN AIR

-0.5

Correlation Coefficient

PennantPark Investment  NORWEGIAN AIR

Very good diversification

The 3 months correlation between PennantPark and NORWEGIAN is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and NORWEGIAN AIR SHUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORWEGIAN AIR SHUT 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 NORWEGIAN AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORWEGIAN AIR SHUT has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and NORWEGIAN AIR go up and down completely randomly.

Pair Corralation between PennantPark Investment and NORWEGIAN AIR

Assuming the 90 days horizon PennantPark Investment is expected to generate 0.65 times more return on investment than NORWEGIAN AIR. However, PennantPark Investment is 1.53 times less risky than NORWEGIAN AIR. It trades about 0.0 of its potential returns per unit of risk. NORWEGIAN AIR SHUT is currently generating about -0.03 per unit of risk. If you would invest  653.00  in PennantPark Investment on September 25, 2024 and sell it today you would lose (1.00) from holding PennantPark Investment or give up 0.15% of portfolio value over 90 days.

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

PennantPark Investment  vs.  NORWEGIAN AIR SHUT

PennantPark Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PennantPark Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NORWEGIAN AIR SHUT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORWEGIAN AIR SHUT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with PennantPark Investment and NORWEGIAN AIR

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

The idea behind PennantPark Investment and NORWEGIAN AIR SHUT 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.

Check out your portfolio center.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.