Correlation Between Scholastic and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Scholastic and PennantPark Investment 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 Scholastic and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scholastic and PennantPark Investment, you can compare the effects of market volatilities on Scholastic and PennantPark Investment 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 Scholastic with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scholastic and PennantPark Investment.
Diversification Opportunities for Scholastic and PennantPark Investment
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Scholastic and PennantPark is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Scholastic and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Scholastic 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 Scholastic are associated (or correlated) with PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of Scholastic i.e., Scholastic and PennantPark Investment go up and down completely randomly.
Pair Corralation between Scholastic and PennantPark Investment
Given the investment horizon of 90 days Scholastic is expected to generate 2.12 times more return on investment than PennantPark Investment. However, Scholastic is 2.12 times more volatile than PennantPark Investment. It trades about 0.19 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.13 per unit of risk. If you would invest 2,379 in Scholastic on September 5, 2024 and sell it today you would earn a total of 251.00 from holding Scholastic or generate 10.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Scholastic vs. PennantPark Investment
Performance |
Timeline |
Scholastic |
PennantPark Investment |
Scholastic and PennantPark Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Scholastic and PennantPark Investment
The main advantage of trading using opposite Scholastic and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scholastic position performs unexpectedly, PennantPark Investment 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 PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.Scholastic vs. Marcus | Scholastic vs. Liberty Media | Scholastic vs. Warner Music Group | Scholastic vs. Fox Corp Class |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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