Correlation Between PennantPark Floating and Kenvue

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

Diversification Opportunities for PennantPark Floating and Kenvue

-0.24

Correlation Coefficient

PennantPark Floating  Kenvue

Very good diversification

The 3 months correlation between PennantPark and Kenvue is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Kenvue Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenvue Inc 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 Kenvue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenvue Inc has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Kenvue go up and down completely randomly.

Pair Corralation between PennantPark Floating and Kenvue

Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 0.79 times more return on investment than Kenvue. However, PennantPark Floating Rate is 1.26 times less risky than Kenvue. It trades about 0.02 of its potential returns per unit of risk. Kenvue Inc is currently generating about -0.02 per unit of risk. If you would invest  974.00  in PennantPark Floating Rate on October 4, 2024 and sell it today you would earn a total of  119.00  from holding PennantPark Floating Rate or generate 12.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.65%
Values	Daily Returns

PennantPark Floating Rate  vs.  Kenvue Inc

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Kenvue Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind PennantPark Floating Rate and Kenvue Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.