Correlation Between PennantPark Floating and Marchex

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

Diversification Opportunities for PennantPark Floating and Marchex

-0.22

Correlation Coefficient

PennantPark Floating  Marchex

Very good diversification

The 3 months correlation between PennantPark and Marchex is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Marchex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marchex 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 Marchex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marchex has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Marchex go up and down completely randomly.

Pair Corralation between PennantPark Floating and Marchex

Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 0.17 times more return on investment than Marchex. However, PennantPark Floating Rate is 5.91 times less risky than Marchex. It trades about 0.05 of its potential returns per unit of risk. Marchex is currently generating about -0.09 per unit of risk. If you would invest  1,095  in PennantPark Floating Rate on October 11, 2024 and sell it today you would earn a total of  7.00  from holding PennantPark Floating Rate or generate 0.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PennantPark Floating Rate  vs.  Marchex

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.

Marchex

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marchex are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, Marchex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PennantPark Floating and Marchex

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

The idea behind PennantPark Floating Rate and Marchex 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.