Correlation Between PennantPark Floating and Unicorn Technologies

Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Unicorn Technologies 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 Unicorn Technologies 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 Unicorn Technologies , you can compare the effects of market volatilities on PennantPark Floating and Unicorn Technologies 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 Unicorn Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Unicorn Technologies.

Diversification Opportunities for PennantPark Floating and Unicorn Technologies

-0.74

Correlation Coefficient

PennantPark Floating  Unicorn Technologies

Pay attention - limited upside

The 3 months correlation between PennantPark and Unicorn is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Unicorn Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicorn Technologies 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 Unicorn Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unicorn Technologies has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Unicorn Technologies go up and down completely randomly.

Pair Corralation between PennantPark Floating and Unicorn Technologies

Assuming the 90 days trading horizon PennantPark Floating Rate is expected to generate 2.7 times more return on investment than Unicorn Technologies. However, PennantPark Floating is 2.7 times more volatile than Unicorn Technologies . It trades about 0.24 of its potential returns per unit of risk. Unicorn Technologies is currently generating about -0.29 per unit of risk. If you would invest  3,148  in PennantPark Floating Rate on September 23, 2024 and sell it today you would earn a total of  1,025  from holding PennantPark Floating Rate or generate 32.56% return on investment over 90 days.

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

PennantPark Floating Rate  vs.  Unicorn Technologies

PennantPark Floating Rate

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Floating Rate are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PennantPark Floating sustained solid returns over the last few months and may actually be approaching a breakup point.

Unicorn Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PennantPark Floating and Unicorn Technologies

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

The idea behind PennantPark Floating Rate and Unicorn Technologies 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.