Correlation Between PennantPark Floating and 629377CH3

Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and 629377CH3 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 629377CH3 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 NRG Energy 525, you can compare the effects of market volatilities on PennantPark Floating and 629377CH3 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 629377CH3. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and 629377CH3.

Diversification Opportunities for PennantPark Floating and 629377CH3

-0.24

Correlation Coefficient

PennantPark Floating  629377CH3

Very good diversification

The 3 months correlation between PennantPark and 629377CH3 is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and NRG Energy 525 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy 525 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 629377CH3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy 525 has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and 629377CH3 go up and down completely randomly.

Pair Corralation between PennantPark Floating and 629377CH3

Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 3.79 times more return on investment than 629377CH3. However, PennantPark Floating is 3.79 times more volatile than NRG Energy 525. It trades about 0.15 of its potential returns per unit of risk. NRG Energy 525 is currently generating about 0.05 per unit of risk. If you would invest  1,053  in PennantPark Floating Rate on December 27, 2024 and sell it today you would earn a total of  88.00  from holding PennantPark Floating Rate or generate 8.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

PennantPark Floating Rate  vs.  NRG Energy 525

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.

NRG Energy 525

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NRG Energy 525 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 629377CH3 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PennantPark Floating and 629377CH3

The main advantage of trading using opposite PennantPark Floating and 629377CH3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, 629377CH3 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 629377CH3 will offset losses from the drop in 629377CH3's long position.

The idea behind PennantPark Floating Rate and NRG Energy 525 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.