Correlation Between PennantPark Floating and CARRIER

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

Diversification Opportunities for PennantPark Floating and CARRIER

0.37
  Correlation Coefficient

Weak diversification

The 3 months correlation between PennantPark and CARRIER is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and CARRIER GLOBAL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARRIER GLOBAL P 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 CARRIER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARRIER GLOBAL P has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and CARRIER go up and down completely randomly.

Pair Corralation between PennantPark Floating and CARRIER

Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 1.09 times more return on investment than CARRIER. However, PennantPark Floating is 1.09 times more volatile than CARRIER GLOBAL P. It trades about -0.05 of its potential returns per unit of risk. CARRIER GLOBAL P is currently generating about -0.17 per unit of risk. If you would invest  1,122  in PennantPark Floating Rate on September 18, 2024 and sell it today you would lose (29.00) from holding PennantPark Floating Rate or give up 2.58% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.41%
ValuesDaily Returns

PennantPark Floating Rate  vs.  CARRIER GLOBAL P

 Performance 
       Timeline  
PennantPark Floating Rate 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
CARRIER GLOBAL P 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CARRIER GLOBAL P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CARRIER GLOBAL P investors.

PennantPark Floating and CARRIER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PennantPark Floating and CARRIER

The main advantage of trading using opposite PennantPark Floating and CARRIER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, CARRIER 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 CARRIER will offset losses from the drop in CARRIER's long position.
The idea behind PennantPark Floating Rate and CARRIER GLOBAL P 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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