Correlation Between PennantPark Investment and CARSALESCOM

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

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

Diversification Opportunities for PennantPark Investment and CARSALESCOM

-0.27

Correlation Coefficient

PennantPark Investment  CARSALESCOM

Very good diversification

The 3 months correlation between PennantPark and CARSALESCOM is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and CARSALESCOM go up and down completely randomly.

Pair Corralation between PennantPark Investment and CARSALESCOM

Assuming the 90 days horizon PennantPark Investment is expected to generate 68.15 times less return on investment than CARSALESCOM. In addition to that, PennantPark Investment is 1.27 times more volatile than CARSALESCOM. It trades about 0.0 of its total potential returns per unit of risk. CARSALESCOM is currently generating about 0.26 per unit of volatility. If you would invest  2,180  in CARSALESCOM on October 26, 2024 and sell it today you would earn a total of  180.00  from holding CARSALESCOM or generate 8.26% return on investment over 90 days.

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

PennantPark Investment  vs.  CARSALESCOM

PennantPark Investment

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 4 (%) 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 February 2025.

CARSALESCOM

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CARSALESCOM are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, CARSALESCOM is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PennantPark Investment and CARSALESCOM

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

The idea behind PennantPark Investment and CARSALESCOM 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.