Correlation Between PennantPark Investment and Molson Coors

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

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

Diversification Opportunities for PennantPark Investment and Molson Coors

-0.06

Correlation Coefficient

PennantPark Investment  Molson Coors

Good diversification

The 3 months correlation between PennantPark and Molson is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Molson Coors Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Brewing 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Brewing has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Molson Coors go up and down completely randomly.

Pair Corralation between PennantPark Investment and Molson Coors

Given the investment horizon of 90 days PennantPark Investment is expected to generate 0.78 times more return on investment than Molson Coors. However, PennantPark Investment is 1.29 times less risky than Molson Coors. It trades about 0.36 of its potential returns per unit of risk. Molson Coors Brewing is currently generating about -0.44 per unit of risk. If you would invest  670.00  in PennantPark Investment on October 5, 2024 and sell it today you would earn a total of  44.00  from holding PennantPark Investment or generate 6.57% return on investment over 90 days.

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

PennantPark Investment  vs.  Molson Coors Brewing

PennantPark Investment

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 8 (%) 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.

Molson Coors Brewing

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Molson Coors is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with PennantPark Investment and Molson Coors

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

The idea behind PennantPark Investment and Molson Coors Brewing 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.