Correlation Between PennantPark Investment and Wynn Resorts

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

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

Diversification Opportunities for PennantPark Investment and Wynn Resorts

0.15

Correlation Coefficient

PennantPark Investment  Wynn Resorts

Average diversification

The 3 months correlation between PennantPark and Wynn is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Wynn Resorts Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Resorts Limited 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 Wynn Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Resorts Limited has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Wynn Resorts go up and down completely randomly.

Pair Corralation between PennantPark Investment and Wynn Resorts

Assuming the 90 days horizon PennantPark Investment is expected to generate 0.85 times more return on investment than Wynn Resorts. However, PennantPark Investment is 1.18 times less risky than Wynn Resorts. It trades about 0.01 of its potential returns per unit of risk. Wynn Resorts Limited is currently generating about -0.07 per unit of risk. If you would invest  639.00  in PennantPark Investment on December 21, 2024 and sell it today you would lose (2.00) from holding PennantPark Investment or give up 0.31% of portfolio value over 90 days.

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

PennantPark Investment  vs.  Wynn Resorts Limited

PennantPark Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days PennantPark Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PennantPark Investment is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Wynn Resorts Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wynn Resorts Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PennantPark Investment and Wynn Resorts

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

The idea behind PennantPark Investment and Wynn Resorts Limited 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.