Correlation Between PennantPark Investment and Carlyle

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

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

Diversification Opportunities for PennantPark Investment and Carlyle

-0.43

Correlation Coefficient

PennantPark Investment  Carlyle

Very good diversification

The 3 months correlation between PennantPark and Carlyle is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle 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 Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Carlyle go up and down completely randomly.

Pair Corralation between PennantPark Investment and Carlyle

Given the investment horizon of 90 days PennantPark Investment is expected to generate 0.45 times more return on investment than Carlyle. However, PennantPark Investment is 2.23 times less risky than Carlyle. It trades about 0.06 of its potential returns per unit of risk. Carlyle Group is currently generating about -0.08 per unit of risk. If you would invest  678.00  in PennantPark Investment on December 29, 2024 and sell it today you would earn a total of  28.00  from holding PennantPark Investment or generate 4.13% 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.  Carlyle Group

PennantPark Investment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PennantPark Investment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Carlyle Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PennantPark Investment and Carlyle

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

The idea behind PennantPark Investment and Carlyle 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.