Correlation Between PennantPark Investment and Everus Construction

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

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

Diversification Opportunities for PennantPark Investment and Everus Construction

0.0

Correlation Coefficient

PennantPark Investment  Everus Construction

Pay attention - limited upside

The 3 months correlation between PennantPark and Everus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Everus Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everus Construction 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 Everus Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everus Construction has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Everus Construction go up and down completely randomly.

Pair Corralation between PennantPark Investment and Everus Construction

Given the investment horizon of 90 days PennantPark Investment is expected to generate 11.33 times less return on investment than Everus Construction. But when comparing it to its historical volatility, PennantPark Investment is 3.4 times less risky than Everus Construction. It trades about 0.08 of its potential returns per unit of risk. Everus Construction Group is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  4,900  in Everus Construction Group on September 26, 2024 and sell it today you would earn a total of  2,158  from holding Everus Construction Group or generate 44.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	13.18%
Values	Daily Returns

PennantPark Investment  vs.  Everus Construction 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 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.

Everus Construction

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly sluggish fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PennantPark Investment and Everus Construction

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

The idea behind PennantPark Investment and Everus Construction 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.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.