Correlation Between PennantPark Investment and 8426EPAD0

Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and 8426EPAD0 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 8426EPAD0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PennantPark Investment and US8426EPAD09, you can compare the effects of market volatilities on PennantPark Investment and 8426EPAD0 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 8426EPAD0. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and 8426EPAD0.

Diversification Opportunities for PennantPark Investment and 8426EPAD0

-0.48

Correlation Coefficient

PennantPark Investment  8426EPAD0

Very good diversification

The 3 months correlation between PennantPark and 8426EPAD0 is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and US8426EPAD09 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US8426EPAD09 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 8426EPAD0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US8426EPAD09 has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and 8426EPAD0 go up and down completely randomly.

Pair Corralation between PennantPark Investment and 8426EPAD0

Given the investment horizon of 90 days PennantPark Investment is expected to generate 1.12 times more return on investment than 8426EPAD0. However, PennantPark Investment is 1.12 times more volatile than US8426EPAD09. It trades about 0.13 of its potential returns per unit of risk. US8426EPAD09 is currently generating about -0.12 per unit of risk. If you would invest  683.00  in PennantPark Investment on October 7, 2024 and sell it today you would earn a total of  31.00  from holding PennantPark Investment or generate 4.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.24%
Values	Daily Returns

PennantPark Investment  vs.  US8426EPAD09

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.

US8426EPAD09

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US8426EPAD09 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Bond's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for US8426EPAD09 shareholders.

Pair Trading with PennantPark Investment and 8426EPAD0

The main advantage of trading using opposite PennantPark Investment and 8426EPAD0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, 8426EPAD0 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 8426EPAD0 will offset losses from the drop in 8426EPAD0's long position.

The idea behind PennantPark Investment and US8426EPAD09 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.