Correlation Between PennantPark Floating and Denali Capital

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

Diversification Opportunities for PennantPark Floating and Denali Capital

-0.41

Correlation Coefficient

PennantPark Floating  Denali Capital

Very good diversification

The 3 months correlation between PennantPark and Denali is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Denali Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denali Capital Acqui 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 Denali Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denali Capital Acqui has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Denali Capital go up and down completely randomly.

Pair Corralation between PennantPark Floating and Denali Capital

Given the investment horizon of 90 days PennantPark Floating is expected to generate 4273.43 times less return on investment than Denali Capital. But when comparing it to its historical volatility, PennantPark Floating Rate is 302.68 times less risky than Denali Capital. It trades about 0.02 of its potential returns per unit of risk. Denali Capital Acquisition is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  4.50  in Denali Capital Acquisition on September 18, 2024 and sell it today you would lose (1.00) from holding Denali Capital Acquisition or give up 22.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	58.68%
Values	Daily Returns

PennantPark Floating Rate  vs.  Denali Capital Acquisition

PennantPark Floating Rate

Risk-Adjusted Performance

0 of 100

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 comparatively stable essential indicators, PennantPark Floating is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Denali Capital Acqui

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Denali Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with PennantPark Floating and Denali Capital

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

The idea behind PennantPark Floating Rate and Denali Capital Acquisition 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.