Correlation Between PennantPark Floating and Alvarium Tiedemann

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

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

Diversification Opportunities for PennantPark Floating and Alvarium Tiedemann

-0.6

Correlation Coefficient

PennantPark Floating  Alvarium Tiedemann

Excellent diversification

The 3 months correlation between PennantPark and Alvarium is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Alvarium Tiedemann Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvarium Tiedemann and PennantPark Floating 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 PennantPark Floating Rate are associated (or correlated) with Alvarium Tiedemann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alvarium Tiedemann has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Alvarium Tiedemann go up and down completely randomly.

Pair Corralation between PennantPark Floating and Alvarium Tiedemann

Given the investment horizon of 90 days PennantPark Floating is expected to generate 1.3 times less return on investment than Alvarium Tiedemann. But when comparing it to its historical volatility, PennantPark Floating Rate is 4.86 times less risky than Alvarium Tiedemann. It trades about 0.02 of its potential returns per unit of risk. Alvarium Tiedemann Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  916.00  in Alvarium Tiedemann Holdings on October 5, 2024 and sell it today you would lose (477.00) from holding Alvarium Tiedemann Holdings or give up 52.07% of portfolio value over 90 days.

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

PennantPark Floating Rate  vs.  Alvarium Tiedemann Holdings

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.

Alvarium Tiedemann

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with PennantPark Floating and Alvarium Tiedemann

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

The idea behind PennantPark Floating Rate and Alvarium Tiedemann Holdings 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.