Correlation Between Inception Growth and PennantPark Floating

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

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

Diversification Opportunities for Inception Growth and PennantPark Floating

-0.24

Correlation Coefficient

Inception Growth  PennantPark Floating

Very good diversification

The 3 months correlation between Inception and PennantPark is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Inception Growth Acquisition 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 Inception Growth 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 Inception Growth Acquisition 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 Inception Growth i.e., Inception Growth and PennantPark Floating go up and down completely randomly.

Pair Corralation between Inception Growth and PennantPark Floating

Assuming the 90 days horizon Inception Growth Acquisition is expected to generate 1.4 times more return on investment than PennantPark Floating. However, Inception Growth is 1.4 times more volatile than PennantPark Floating Rate. It trades about 0.16 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about -0.05 per unit of risk. If you would invest  1,114  in Inception Growth Acquisition on October 8, 2024 and sell it today you would earn a total of  125.00  from holding Inception Growth Acquisition or generate 11.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.06%
Values	Daily Returns

Inception Growth Acquisition  vs.  PennantPark Floating Rate

Inception Growth Acq

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Inception Growth Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Inception Growth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 Inception Growth and PennantPark Floating

The main advantage of trading using opposite Inception Growth and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inception Growth 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 Inception Growth Acquisition 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.