Correlation Between PennantPark Floating and 172967NU1

Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and 172967NU1 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 Floating and 172967NU1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PennantPark Floating Rate and C 491 24 MAY 33, you can compare the effects of market volatilities on PennantPark Floating and 172967NU1 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 Floating with a short position of 172967NU1. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and 172967NU1.

Diversification Opportunities for PennantPark Floating and 172967NU1

0.19

Correlation Coefficient

PennantPark Floating  172967NU1

Average diversification

The 3 months correlation between PennantPark and 172967NU1 is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and C 491 24 MAY 33 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 172967NU1 and PennantPark Floating 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 Floating Rate are associated (or correlated) with 172967NU1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 172967NU1 has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and 172967NU1 go up and down completely randomly.

Pair Corralation between PennantPark Floating and 172967NU1

Given the investment horizon of 90 days PennantPark Floating Rate is expected to under-perform the 172967NU1. In addition to that, PennantPark Floating is 3.46 times more volatile than C 491 24 MAY 33. It trades about -0.08 of its total potential returns per unit of risk. C 491 24 MAY 33 is currently generating about 0.06 per unit of volatility. If you would invest  9,514  in C 491 24 MAY 33 on January 11, 2025 and sell it today you would earn a total of  210.00  from holding C 491 24 MAY 33 or generate 2.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

PennantPark Floating Rate  vs.  C 491 24 MAY 33

PennantPark Floating Rate

Risk-Adjusted Performance

Very Weak

Over the last 90 days PennantPark Floating Rate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

172967NU1

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in C 491 24 MAY 33 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 172967NU1 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PennantPark Floating and 172967NU1

The main advantage of trading using opposite PennantPark Floating and 172967NU1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, 172967NU1 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 172967NU1 will offset losses from the drop in 172967NU1's long position.

The idea behind PennantPark Floating Rate and C 491 24 MAY 33 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.