Correlation Between PennantPark Floating and FTAC Emerald

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

Diversification Opportunities for PennantPark Floating and FTAC Emerald

-0.57

Correlation Coefficient

PennantPark Floating  FTAC Emerald

Excellent diversification

The 3 months correlation between PennantPark and FTAC is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and FTAC Emerald Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAC Emerald Acquisition 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 FTAC Emerald. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAC Emerald Acquisition has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and FTAC Emerald go up and down completely randomly.

Pair Corralation between PennantPark Floating and FTAC Emerald

Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 0.62 times more return on investment than FTAC Emerald. However, PennantPark Floating Rate is 1.6 times less risky than FTAC Emerald. It trades about 0.02 of its potential returns per unit of risk. FTAC Emerald Acquisition is currently generating about -0.22 per unit of risk. If you would invest  1,100  in PennantPark Floating Rate on October 10, 2024 and sell it today you would earn a total of  2.00  from holding PennantPark Floating Rate or generate 0.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	38.1%
Values	Daily Returns

PennantPark Floating Rate  vs.  FTAC Emerald Acquisition

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.

FTAC Emerald Acquisition

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days FTAC Emerald Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, FTAC Emerald 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 FTAC Emerald

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

The idea behind PennantPark Floating Rate and FTAC Emerald Acquisition 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.