Correlation Between PennantPark Floating and Aquagold International

Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Aquagold International 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 Aquagold International 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 Aquagold International, you can compare the effects of market volatilities on PennantPark Floating and Aquagold International 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 Aquagold International. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Aquagold International.

Diversification Opportunities for PennantPark Floating and Aquagold International

0.3

Correlation Coefficient

PennantPark Floating  Aquagold International

Weak diversification

The 3 months correlation between PennantPark and Aquagold is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International 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 Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Aquagold International go up and down completely randomly.

Pair Corralation between PennantPark Floating and Aquagold International

Given the investment horizon of 90 days PennantPark Floating is expected to generate 39.38 times less return on investment than Aquagold International. But when comparing it to its historical volatility, PennantPark Floating Rate is 46.24 times less risky than Aquagold International. It trades about 0.06 of its potential returns per unit of risk. Aquagold International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Aquagold International on October 15, 2024 and sell it today you would lose (24.96) from holding Aquagold International or give up 99.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

PennantPark Floating Rate  vs.  Aquagold International

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.

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PennantPark Floating and Aquagold International

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

The idea behind PennantPark Floating Rate and Aquagold International 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.