Correlation Between PennantPark Floating and Carlyle Secured

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

Diversification Opportunities for PennantPark Floating and Carlyle Secured

0.76

Correlation Coefficient

PennantPark Floating  Carlyle Secured

Poor diversification

The 3 months correlation between PennantPark and Carlyle is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Carlyle Secured Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Secured Lending 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 Carlyle Secured. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Secured Lending has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Carlyle Secured go up and down completely randomly.

Pair Corralation between PennantPark Floating and Carlyle Secured

Given the investment horizon of 90 days PennantPark Floating is expected to generate 3.31 times less return on investment than Carlyle Secured. But when comparing it to its historical volatility, PennantPark Floating Rate is 1.26 times less risky than Carlyle Secured. It trades about 0.03 of its potential returns per unit of risk. Carlyle Secured Lending is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,661  in Carlyle Secured Lending on September 2, 2024 and sell it today you would earn a total of  72.00  from holding Carlyle Secured Lending or generate 4.33% return on investment over 90 days.

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

PennantPark Floating Rate  vs.  Carlyle Secured Lending

PennantPark Floating Rate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Floating Rate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Carlyle Secured Lending

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Secured Lending are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Carlyle Secured is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PennantPark Floating and Carlyle Secured

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

The idea behind PennantPark Floating Rate and Carlyle Secured Lending 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.