Correlation Between PennantPark Investment and Exxon Mobil

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

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

Diversification Opportunities for PennantPark Investment and Exxon Mobil

0.42

Correlation Coefficient

PennantPark Investment  Exxon Mobil

Very weak diversification

The 3 months correlation between PennantPark and Exxon is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Exxon Mobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil 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 Exxon Mobil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Exxon Mobil go up and down completely randomly.

Pair Corralation between PennantPark Investment and Exxon Mobil

Assuming the 90 days horizon PennantPark Investment is expected to generate 2.04 times less return on investment than Exxon Mobil. In addition to that, PennantPark Investment is 1.08 times more volatile than Exxon Mobil. It trades about 0.03 of its total potential returns per unit of risk. Exxon Mobil is currently generating about 0.08 per unit of volatility. If you would invest  10,152  in Exxon Mobil on December 30, 2024 and sell it today you would earn a total of  750.00  from holding Exxon Mobil or generate 7.39% return on investment over 90 days.

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

PennantPark Investment  vs.  Exxon Mobil

PennantPark Investment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PennantPark Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Exxon Mobil

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Exxon Mobil may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PennantPark Investment and Exxon Mobil

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

The idea behind PennantPark Investment and Exxon Mobil 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .