Correlation Between ASGN and Pennant

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

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

Diversification Opportunities for ASGN and Pennant

0.67

Correlation Coefficient

ASGN  Pennant

Poor diversification

The 3 months correlation between ASGN and Pennant is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ASGN Inc and Pennant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pennant Group and ASGN 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 ASGN Inc are associated (or correlated) with Pennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pennant Group has no effect on the direction of ASGN i.e., ASGN and Pennant go up and down completely randomly.

Pair Corralation between ASGN and Pennant

Given the investment horizon of 90 days ASGN is expected to generate 10.37 times less return on investment than Pennant. But when comparing it to its historical volatility, ASGN Inc is 1.44 times less risky than Pennant. It trades about 0.01 of its potential returns per unit of risk. Pennant Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,078  in Pennant Group on September 21, 2024 and sell it today you would earn a total of  1,648  from holding Pennant Group or generate 152.88% return on investment over 90 days.

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

ASGN Inc  vs.  Pennant Group

ASGN Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASGN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pennant Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pennant Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ASGN and Pennant

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

The idea behind ASGN Inc and Pennant Group 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.