Correlation Between JEFFERIES and PennantPark Investment

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

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

Diversification Opportunities for JEFFERIES and PennantPark Investment

-0.62

Correlation Coefficient

JEFFERIES  PennantPark Investment

Excellent diversification

The 3 months correlation between JEFFERIES and PennantPark is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding JEFFERIES GROUP INC and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and JEFFERIES 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 JEFFERIES GROUP INC 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 JEFFERIES i.e., JEFFERIES and PennantPark Investment go up and down completely randomly.

Pair Corralation between JEFFERIES and PennantPark Investment

Assuming the 90 days trading horizon JEFFERIES is expected to generate 55.03 times less return on investment than PennantPark Investment. But when comparing it to its historical volatility, JEFFERIES GROUP INC is 1.02 times less risky than PennantPark Investment. It trades about 0.0 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  649.00  in PennantPark Investment on December 2, 2024 and sell it today you would earn a total of  78.00  from holding PennantPark Investment or generate 12.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	62.3%
Values	Daily Returns

JEFFERIES GROUP INC  vs.  PennantPark Investment

JEFFERIES GROUP INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days JEFFERIES GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JEFFERIES is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

PennantPark Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 13 (%) 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 April 2025.

Pair Trading with JEFFERIES and PennantPark Investment

The main advantage of trading using opposite JEFFERIES and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JEFFERIES 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 JEFFERIES GROUP INC 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.