Correlation Between Aldel Financial and PennantPark Floating

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

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

Diversification Opportunities for Aldel Financial and PennantPark Floating

0.35

Correlation Coefficient

Aldel Financial  PennantPark Floating

Weak diversification

The 3 months correlation between Aldel and PennantPark is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate and Aldel Financial 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 Aldel Financial II are associated (or correlated) with PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of Aldel Financial i.e., Aldel Financial and PennantPark Floating go up and down completely randomly.

Pair Corralation between Aldel Financial and PennantPark Floating

Given the investment horizon of 90 days Aldel Financial is expected to generate 2.17 times less return on investment than PennantPark Floating. But when comparing it to its historical volatility, Aldel Financial II is 10.97 times less risky than PennantPark Floating. It trades about 0.15 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  950.00  in PennantPark Floating Rate on October 11, 2024 and sell it today you would earn a total of  152.00  from holding PennantPark Floating Rate or generate 16.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	3.43%
Values	Daily Returns

Aldel Financial II  vs.  PennantPark Floating Rate

Aldel Financial II

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Aldel Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

PennantPark Floating Rate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PennantPark Floating Rate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, PennantPark Floating is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aldel Financial and PennantPark Floating

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

The idea behind Aldel Financial II and PennantPark Floating Rate 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.