Correlation Between Natural Alternatives and PennantPark Investment

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Natural Alternatives 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 Natural Alternatives and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Alternatives International and PennantPark Investment, you can compare the effects of market volatilities on Natural Alternatives 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 Natural Alternatives with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Alternatives and PennantPark Investment.

Diversification Opportunities for Natural Alternatives and PennantPark Investment

-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between Natural and PennantPark is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Natural Alternatives Internati and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Natural Alternatives 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 Natural Alternatives International 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 Natural Alternatives i.e., Natural Alternatives and PennantPark Investment go up and down completely randomly.

Pair Corralation between Natural Alternatives and PennantPark Investment

Given the investment horizon of 90 days Natural Alternatives International is expected to under-perform the PennantPark Investment. In addition to that, Natural Alternatives is 3.92 times more volatile than PennantPark Investment. It trades about -0.13 of its total potential returns per unit of risk. PennantPark Investment is currently generating about 0.04 per unit of volatility. If you would invest  678.00  in PennantPark Investment on September 11, 2024 and sell it today you would earn a total of  14.00  from holding PennantPark Investment or generate 2.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Natural Alternatives Internati  vs.  PennantPark Investment

 Performance 
       Timeline  
Natural Alternatives 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Natural Alternatives International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
PennantPark Investment 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
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. In spite of comparatively stable basic indicators, PennantPark Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Natural Alternatives and PennantPark Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Natural Alternatives and PennantPark Investment

The main advantage of trading using opposite Natural Alternatives and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Alternatives 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 Natural Alternatives International 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.
Check out your portfolio center.
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

Other Complementary Tools

Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing