Correlation Between PennantPark Floating and Sellas Life

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

Diversification Opportunities for PennantPark Floating and Sellas Life

0.59

Correlation Coefficient

PennantPark Floating  Sellas Life

Very weak diversification

The 3 months correlation between PennantPark and Sellas is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Sellas Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sellas Life Sciences 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 Sellas Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sellas Life Sciences has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Sellas Life go up and down completely randomly.

Pair Corralation between PennantPark Floating and Sellas Life

Given the investment horizon of 90 days PennantPark Floating is expected to generate 3.1 times less return on investment than Sellas Life. But when comparing it to its historical volatility, PennantPark Floating Rate is 9.2 times less risky than Sellas Life. It trades about 0.12 of its potential returns per unit of risk. Sellas Life Sciences is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  116.00  in Sellas Life Sciences on December 1, 2024 and sell it today you would earn a total of  2.00  from holding Sellas Life Sciences or generate 1.72% return on investment over 90 days.

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

PennantPark Floating Rate  vs.  Sellas Life Sciences

PennantPark Floating Rate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Floating Rate are ranked lower than 9 (%) 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.

Sellas Life Sciences

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sellas Life Sciences are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Sellas Life unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PennantPark Floating and Sellas Life

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

The idea behind PennantPark Floating Rate and Sellas Life Sciences 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.