Correlation Between PennantPark Floating and Griffon

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

Diversification Opportunities for PennantPark Floating and Griffon

-0.08

Correlation Coefficient

PennantPark Floating  Griffon

Good diversification

The 3 months correlation between PennantPark and Griffon is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon 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 Griffon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffon has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Griffon go up and down completely randomly.

Pair Corralation between PennantPark Floating and Griffon

Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 0.39 times more return on investment than Griffon. However, PennantPark Floating Rate is 2.54 times less risky than Griffon. It trades about 0.11 of its potential returns per unit of risk. Griffon is currently generating about -0.14 per unit of risk. If you would invest  1,104  in PennantPark Floating Rate on December 4, 2024 and sell it today you would earn a total of  25.00  from holding PennantPark Floating Rate or generate 2.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

PennantPark Floating Rate  vs.  Griffon

PennantPark Floating Rate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Floating Rate are ranked lower than 8 (%) 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.

Griffon

Risk-Adjusted Performance

Very Weak

Over the last 90 days Griffon 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PennantPark Floating and Griffon

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

The idea behind PennantPark Floating Rate and Griffon 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.