Correlation Between PennantPark Floating and NIP Group

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

Diversification Opportunities for PennantPark Floating and NIP Group

0.47

Correlation Coefficient

PennantPark Floating  NIP Group

Very weak diversification

The 3 months correlation between PennantPark and NIP is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and NIP Group American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIP Group American 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 NIP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIP Group American has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and NIP Group go up and down completely randomly.

Pair Corralation between PennantPark Floating and NIP Group

Given the investment horizon of 90 days PennantPark Floating Rate is expected to under-perform the NIP Group. But the stock apears to be less risky and, when comparing its historical volatility, PennantPark Floating Rate is 3.42 times less risky than NIP Group. The stock trades about -0.05 of its potential returns per unit of risk. The NIP Group American is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  715.00  in NIP Group American on September 15, 2024 and sell it today you would lose (5.00) from holding NIP Group American or give up 0.7% of portfolio value over 90 days.

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

PennantPark Floating Rate  vs.  NIP Group American

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.

NIP Group American

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PennantPark Floating and NIP Group

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

The idea behind PennantPark Floating Rate and NIP Group American 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.