Correlation Between Moncler SpA and PennantPark Investment

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

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

Diversification Opportunities for Moncler SpA and PennantPark Investment

0.34

Correlation Coefficient

Moncler SpA  PennantPark Investment

Weak diversification

The 3 months correlation between Moncler and PennantPark is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Moncler SpA and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Moncler SpA 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 Moncler SpA 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 Moncler SpA i.e., Moncler SpA and PennantPark Investment go up and down completely randomly.

Pair Corralation between Moncler SpA and PennantPark Investment

Assuming the 90 days horizon Moncler SpA is expected to under-perform the PennantPark Investment. But the stock apears to be less risky and, when comparing its historical volatility, Moncler SpA is 1.0 times less risky than PennantPark Investment. The stock trades about 0.0 of its potential returns per unit of risk. The PennantPark Investment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  391.00  in PennantPark Investment on October 24, 2024 and sell it today you would earn a total of  283.00  from holding PennantPark Investment or generate 72.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.76%
Values	Daily Returns

Moncler SpA  vs.  PennantPark Investment

Moncler SpA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Moncler SpA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Moncler SpA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PennantPark Investment

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Moncler SpA and PennantPark Investment

The main advantage of trading using opposite Moncler SpA and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moncler SpA 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 Moncler SpA 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.