Correlation Between PennantPark Floating and Investec

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

Diversification Opportunities for PennantPark Floating and Investec

-0.5

Correlation Coefficient

PennantPark Floating  Investec

Very good diversification

The 3 months correlation between PennantPark and Investec is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Investec Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Group 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 Investec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Group has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Investec go up and down completely randomly.

Pair Corralation between PennantPark Floating and Investec

Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 2.26 times more return on investment than Investec. However, PennantPark Floating is 2.26 times more volatile than Investec Group. It trades about 0.07 of its potential returns per unit of risk. Investec Group is currently generating about 0.1 per unit of risk. If you would invest  911.00  in PennantPark Floating Rate on September 26, 2024 and sell it today you would earn a total of  175.00  from holding PennantPark Floating Rate or generate 19.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.68%
Values	Daily Returns

PennantPark Floating Rate  vs.  Investec Group

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.

Investec Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Investec Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking indicators, Investec is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PennantPark Floating and Investec

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

The idea behind PennantPark Floating Rate and Investec Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.