Correlation Between PennantPark Investment and US Bancorp
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and US Bancorp 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 US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and US Bancorp, you can compare the effects of market volatilities on PennantPark Investment and US Bancorp 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 US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and US Bancorp.
Diversification Opportunities for PennantPark Investment and US Bancorp
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PennantPark and UB5 is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp 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 US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and US Bancorp go up and down completely randomly.
Pair Corralation between PennantPark Investment and US Bancorp
Assuming the 90 days horizon PennantPark Investment is expected to generate 1.26 times more return on investment than US Bancorp. However, PennantPark Investment is 1.26 times more volatile than US Bancorp. It trades about 0.09 of its potential returns per unit of risk. US Bancorp is currently generating about -0.07 per unit of risk. If you would invest 634.00 in PennantPark Investment on November 22, 2024 and sell it today you would earn a total of 56.00 from holding PennantPark Investment or generate 8.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.33% |
Values | Daily Returns |
PennantPark Investment vs. US Bancorp
Performance |
Timeline |
PennantPark Investment |
US Bancorp |
PennantPark Investment and US Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PennantPark Investment and US Bancorp
The main advantage of trading using opposite PennantPark Investment and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp's long position.PennantPark Investment vs. REMEDY ENTERTAINMENT OYJ | ||
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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