Correlation Between PennantPark Floating and Intuitive Surgical

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

Diversification Opportunities for PennantPark Floating and Intuitive Surgical

0.3

Correlation Coefficient

PennantPark Floating  Intuitive Surgical

Weak diversification

The 3 months correlation between PennantPark and Intuitive is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Intuitive Surgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Surgical 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 Intuitive Surgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Surgical has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Intuitive Surgical go up and down completely randomly.

Pair Corralation between PennantPark Floating and Intuitive Surgical

Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 0.42 times more return on investment than Intuitive Surgical. However, PennantPark Floating Rate is 2.39 times less risky than Intuitive Surgical. It trades about 0.13 of its potential returns per unit of risk. Intuitive Surgical is currently generating about -0.04 per unit of risk. If you would invest  1,042  in PennantPark Floating Rate on December 23, 2024 and sell it today you would earn a total of  76.00  from holding PennantPark Floating Rate or generate 7.29% return on investment over 90 days.

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

PennantPark Floating Rate  vs.  Intuitive Surgical

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 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, PennantPark Floating may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Intuitive Surgical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intuitive Surgical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Intuitive Surgical is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PennantPark Floating and Intuitive Surgical

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

The idea behind PennantPark Floating Rate and Intuitive Surgical 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.