Correlation Between PennantPark Investment and Scholastic

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Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Scholastic 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 Scholastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Scholastic, you can compare the effects of market volatilities on PennantPark Investment and Scholastic 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 Scholastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Scholastic.

Diversification Opportunities for PennantPark Investment and Scholastic

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between PennantPark and Scholastic is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Scholastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scholastic 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 Scholastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scholastic has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Scholastic go up and down completely randomly.

Pair Corralation between PennantPark Investment and Scholastic

Given the investment horizon of 90 days PennantPark Investment is expected to generate 3.83 times less return on investment than Scholastic. But when comparing it to its historical volatility, PennantPark Investment is 2.14 times less risky than Scholastic. It trades about 0.09 of its potential returns per unit of risk. Scholastic is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,431  in Scholastic on September 6, 2024 and sell it today you would earn a total of  199.00  from holding Scholastic or generate 8.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

PennantPark Investment  vs.  Scholastic

 Performance 
       Timeline  
PennantPark Investment 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 2 (%) 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.
Scholastic 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Scholastic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PennantPark Investment and Scholastic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PennantPark Investment and Scholastic

The main advantage of trading using opposite PennantPark Investment and Scholastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Scholastic 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 Scholastic will offset losses from the drop in Scholastic's long position.
The idea behind PennantPark Investment and Scholastic 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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