Correlation Between PennantPark Floating and Gladstone Capital

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

Diversification Opportunities for PennantPark Floating and Gladstone Capital

0.69

Correlation Coefficient

PennantPark Floating  Gladstone Capital

Poor diversification

The 3 months correlation between PennantPark and Gladstone is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Gladstone Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Capital 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 Gladstone Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Capital has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Gladstone Capital go up and down completely randomly.

Pair Corralation between PennantPark Floating and Gladstone Capital

Given the investment horizon of 90 days PennantPark Floating is expected to generate 1.54 times less return on investment than Gladstone Capital. But when comparing it to its historical volatility, PennantPark Floating Rate is 1.38 times less risky than Gladstone Capital. It trades about 0.07 of its potential returns per unit of risk. Gladstone Capital is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,702  in Gladstone Capital on November 28, 2024 and sell it today you would earn a total of  137.00  from holding Gladstone Capital or generate 5.07% 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.  Gladstone Capital

PennantPark Floating Rate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Floating Rate are ranked lower than 5 (%) 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.

Gladstone Capital

Risk-Adjusted Performance

Modest

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

Pair Trading with PennantPark Floating and Gladstone Capital

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

The idea behind PennantPark Floating Rate and Gladstone Capital 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.