Correlation Between PennantPark Floating and Sea

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

Diversification Opportunities for PennantPark Floating and Sea

0.72

Correlation Coefficient

PennantPark Floating  Sea

Poor diversification

The 3 months correlation between PennantPark and Sea is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Sea go up and down completely randomly.

Pair Corralation between PennantPark Floating and Sea

Given the investment horizon of 90 days PennantPark Floating is expected to generate 3.0 times less return on investment than Sea. But when comparing it to its historical volatility, PennantPark Floating Rate is 3.19 times less risky than Sea. It trades about 0.15 of its potential returns per unit of risk. Sea is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  10,748  in Sea on December 29, 2024 and sell it today you would earn a total of  2,609  from holding Sea or generate 24.27% return on investment over 90 days.

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

PennantPark Floating Rate  vs.  Sea

PennantPark Floating Rate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Floating Rate are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, PennantPark Floating may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sea

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PennantPark Floating and Sea

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

The idea behind PennantPark Floating Rate and Sea 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..