Correlation Between PennantPark Floating and Uber Technologies

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

Diversification Opportunities for PennantPark Floating and Uber Technologies

0.69

Correlation Coefficient

PennantPark Floating  Uber Technologies

Poor diversification

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

Pair Corralation between PennantPark Floating and Uber Technologies

Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 0.19 times more return on investment than Uber Technologies. However, PennantPark Floating Rate is 5.15 times less risky than Uber Technologies. It trades about -0.17 of its potential returns per unit of risk. Uber Technologies is currently generating about -0.22 per unit of risk. If you would invest  1,103  in PennantPark Floating Rate on September 19, 2024 and sell it today you would lose (22.00) from holding PennantPark Floating Rate or give up 1.99% of portfolio value over 90 days.

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

PennantPark Floating Rate  vs.  Uber Technologies

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.

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with PennantPark Floating and Uber Technologies

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

The idea behind PennantPark Floating Rate and Uber Technologies 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.