Correlation Between PennantPark Floating and ChampionX

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

Diversification Opportunities for PennantPark Floating and ChampionX

0.59

Correlation Coefficient

PennantPark Floating  ChampionX

Very weak diversification

The 3 months correlation between PennantPark and ChampionX is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX 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 ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and ChampionX go up and down completely randomly.

Pair Corralation between PennantPark Floating and ChampionX

Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 0.62 times more return on investment than ChampionX. However, PennantPark Floating Rate is 1.61 times less risky than ChampionX. It trades about 0.03 of its potential returns per unit of risk. ChampionX is currently generating about 0.0 per unit of risk. If you would invest  925.00  in PennantPark Floating Rate on September 29, 2024 and sell it today you would earn a total of  158.00  from holding PennantPark Floating Rate or generate 17.08% return on investment over 90 days.

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

PennantPark Floating Rate  vs.  ChampionX

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.

ChampionX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChampionX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with PennantPark Floating and ChampionX

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

The idea behind PennantPark Floating Rate and ChampionX 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.