Correlation Between PennantPark Investment and Citizens Financial

Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Citizens Financial 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 Investment and Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PennantPark Investment and Citizens Financial Group,, you can compare the effects of market volatilities on PennantPark Investment and Citizens Financial 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 Investment with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Citizens Financial.

Diversification Opportunities for PennantPark Investment and Citizens Financial

-0.44

Correlation Coefficient

PennantPark Investment  Citizens Financial

Very good diversification

The 3 months correlation between PennantPark and Citizens is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Citizens Financial Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Group, and PennantPark Investment 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 Investment are associated (or correlated) with Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial Group, has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Citizens Financial go up and down completely randomly.

Pair Corralation between PennantPark Investment and Citizens Financial

Given the investment horizon of 90 days PennantPark Investment is expected to generate 1.03 times more return on investment than Citizens Financial. However, PennantPark Investment is 1.03 times more volatile than Citizens Financial Group,. It trades about 0.34 of its potential returns per unit of risk. Citizens Financial Group, is currently generating about -0.03 per unit of risk. If you would invest  684.00  in PennantPark Investment on October 8, 2024 and sell it today you would earn a total of  37.00  from holding PennantPark Investment or generate 5.41% return on investment over 90 days.

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

PennantPark Investment  vs.  Citizens Financial Group,

PennantPark Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, PennantPark Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Citizens Financial Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citizens Financial Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Citizens Financial is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with PennantPark Investment and Citizens Financial

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

The idea behind PennantPark Investment and Citizens Financial Group, 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.