Correlation Between PennantPark Floating and Q2 Holdings

Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Q2 Holdings 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 Q2 Holdings 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 Q2 Holdings, you can compare the effects of market volatilities on PennantPark Floating and Q2 Holdings 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 Q2 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Q2 Holdings.

Diversification Opportunities for PennantPark Floating and Q2 Holdings

-0.69

Correlation Coefficient

PennantPark Floating  Q2 Holdings

Excellent diversification

The 3 months correlation between PennantPark and QTWO is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Q2 Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2 Holdings 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 Q2 Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q2 Holdings has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Q2 Holdings go up and down completely randomly.

Pair Corralation between PennantPark Floating and Q2 Holdings

Given the investment horizon of 90 days PennantPark Floating Rate is expected to under-perform the Q2 Holdings. But the stock apears to be less risky and, when comparing its historical volatility, PennantPark Floating Rate is 3.37 times less risky than Q2 Holdings. The stock trades about -0.17 of its potential returns per unit of risk. The Q2 Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  9,638  in Q2 Holdings on September 19, 2024 and sell it today you would earn a total of  816.00  from holding Q2 Holdings or generate 8.47% return on investment over 90 days.

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

PennantPark Floating Rate  vs.  Q2 Holdings

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.

Q2 Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Q2 Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Q2 Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PennantPark Floating and Q2 Holdings

The main advantage of trading using opposite PennantPark Floating and Q2 Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, Q2 Holdings 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 Q2 Holdings will offset losses from the drop in Q2 Holdings' long position.

The idea behind PennantPark Floating Rate and Q2 Holdings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.