Correlation Between MSAD INSURANCE and PennantPark Investment

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

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

Diversification Opportunities for MSAD INSURANCE and PennantPark Investment

-0.73

Correlation Coefficient

MSAD INSURANCE  PennantPark Investment

Pay attention - limited upside

The 3 months correlation between MSAD and PennantPark is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding MSAD INSURANCE and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and MSAD INSURANCE 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 MSAD INSURANCE are associated (or correlated) with PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of MSAD INSURANCE i.e., MSAD INSURANCE and PennantPark Investment go up and down completely randomly.

Pair Corralation between MSAD INSURANCE and PennantPark Investment

Assuming the 90 days trading horizon MSAD INSURANCE is expected to generate 1.12 times more return on investment than PennantPark Investment. However, MSAD INSURANCE is 1.12 times more volatile than PennantPark Investment. It trades about 0.09 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.06 per unit of risk. If you would invest  1,080  in MSAD INSURANCE on December 5, 2024 and sell it today you would earn a total of  980.00  from holding MSAD INSURANCE or generate 90.74% return on investment over 90 days.

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

MSAD INSURANCE  vs.  PennantPark Investment

MSAD INSURANCE

Risk-Adjusted Performance

Very Weak

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

PennantPark Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PennantPark Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MSAD INSURANCE and PennantPark Investment

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

The idea behind MSAD INSURANCE and PennantPark Investment 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 Commodity Directory module to find actively traded commodities issued by global exchanges.