Correlation Between PennantPark Floating and Eltek

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

Diversification Opportunities for PennantPark Floating and Eltek

-0.5

Correlation Coefficient

PennantPark Floating  Eltek

Very good diversification

The 3 months correlation between PennantPark and Eltek is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eltek 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 Eltek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eltek has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Eltek go up and down completely randomly.

Pair Corralation between PennantPark Floating and Eltek

Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 0.17 times more return on investment than Eltek. However, PennantPark Floating Rate is 5.93 times less risky than Eltek. It trades about -0.19 of its potential returns per unit of risk. Eltek is currently generating about -0.09 per unit of risk. If you would invest  1,095  in PennantPark Floating Rate on September 21, 2024 and sell it today you would lose (27.00) from holding PennantPark Floating Rate or give up 2.47% of portfolio value over 90 days.

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

PennantPark Floating Rate  vs.  Eltek

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.

Eltek

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eltek are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Eltek is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PennantPark Floating and Eltek

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

The idea behind PennantPark Floating Rate and Eltek 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.