Correlation Between PennantPark Floating and Dixons Carphone

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

Diversification Opportunities for PennantPark Floating and Dixons Carphone

0.33

Correlation Coefficient

PennantPark Floating  Dixons Carphone

Weak diversification

The 3 months correlation between PennantPark and Dixons is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Dixons Carphone plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dixons Carphone plc 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 Dixons Carphone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dixons Carphone plc has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Dixons Carphone go up and down completely randomly.

Pair Corralation between PennantPark Floating and Dixons Carphone

Given the investment horizon of 90 days PennantPark Floating is expected to generate 12.4 times less return on investment than Dixons Carphone. But when comparing it to its historical volatility, PennantPark Floating Rate is 4.53 times less risky than Dixons Carphone. It trades about 0.12 of its potential returns per unit of risk. Dixons Carphone plc is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  98.00  in Dixons Carphone plc on October 6, 2024 and sell it today you would earn a total of  20.00  from holding Dixons Carphone plc or generate 20.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

PennantPark Floating Rate  vs.  Dixons Carphone plc

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.

Dixons Carphone plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dixons Carphone plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Dixons Carphone is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PennantPark Floating and Dixons Carphone

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

The idea behind PennantPark Floating Rate and Dixons Carphone plc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.