Correlation Between Financial Institutions and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both Financial Institutions and PennantPark Floating 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 Financial Institutions and PennantPark Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Institutions 848 and PennantPark Floating Rate, you can compare the effects of market volatilities on Financial Institutions and PennantPark Floating 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 Financial Institutions with a short position of PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Institutions and PennantPark Floating.
Diversification Opportunities for Financial Institutions and PennantPark Floating
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Financial and PennantPark is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Financial Institutions 848 and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate and Financial Institutions 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 Financial Institutions 848 are associated (or correlated) with PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of Financial Institutions i.e., Financial Institutions and PennantPark Floating go up and down completely randomly.
Pair Corralation between Financial Institutions and PennantPark Floating
Assuming the 90 days horizon Financial Institutions 848 is expected to generate 4.52 times more return on investment than PennantPark Floating. However, Financial Institutions is 4.52 times more volatile than PennantPark Floating Rate. It trades about 0.13 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about -0.05 per unit of risk. If you would invest 10,801 in Financial Institutions 848 on September 14, 2024 and sell it today you would earn a total of 3,199 from holding Financial Institutions 848 or generate 29.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Financial Institutions 848 vs. PennantPark Floating Rate
Performance |
Timeline |
Financial Institutions |
PennantPark Floating Rate |
Financial Institutions and PennantPark Floating Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Financial Institutions and PennantPark Floating
The main advantage of trading using opposite Financial Institutions and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Institutions position performs unexpectedly, PennantPark Floating 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 Floating will offset losses from the drop in PennantPark Floating's long position.Financial Institutions vs. PennantPark Floating Rate | Financial Institutions vs. PennantPark Investment | Financial Institutions vs. Cardinal Health | Financial Institutions vs. Avadel Pharmaceuticals PLC |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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