Correlation Between UmweltBank and PennantPark Investment

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

By analyzing existing cross correlation between UmweltBank AG and PennantPark Investment, you can compare the effects of market volatilities on UmweltBank 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 UmweltBank with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of UmweltBank and PennantPark Investment.

Diversification Opportunities for UmweltBank and PennantPark Investment

0.27

Correlation Coefficient

UmweltBank  PennantPark Investment

Modest diversification

The 3 months correlation between UmweltBank and PennantPark is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding UmweltBank AG and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and UmweltBank 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 UmweltBank AG 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 UmweltBank i.e., UmweltBank and PennantPark Investment go up and down completely randomly.

Pair Corralation between UmweltBank and PennantPark Investment

Assuming the 90 days trading horizon UmweltBank AG is expected to under-perform the PennantPark Investment. In addition to that, UmweltBank is 1.03 times more volatile than PennantPark Investment. It trades about -0.16 of its total potential returns per unit of risk. PennantPark Investment is currently generating about 0.03 per unit of volatility. If you would invest  646.00  in PennantPark Investment on December 26, 2024 and sell it today you would earn a total of  13.00  from holding PennantPark Investment or generate 2.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

UmweltBank AG  vs.  PennantPark Investment

UmweltBank AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days UmweltBank AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

PennantPark Investment

Risk-Adjusted Performance

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. Despite nearly stable basic indicators, PennantPark Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with UmweltBank and PennantPark Investment

The main advantage of trading using opposite UmweltBank and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UmweltBank 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.

The idea behind UmweltBank AG and PennantPark Investment 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.