Correlation Between PennantPark Floating and Enersys

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

Diversification Opportunities for PennantPark Floating and Enersys

0.72

Correlation Coefficient

PennantPark Floating  Enersys

Poor diversification

The 3 months correlation between PennantPark and Enersys is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Enersys go up and down completely randomly.

Pair Corralation between PennantPark Floating and Enersys

Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 0.54 times more return on investment than Enersys. However, PennantPark Floating Rate is 1.86 times less risky than Enersys. It trades about -0.07 of its potential returns per unit of risk. Enersys is currently generating about -0.1 per unit of risk. If you would invest  1,125  in PennantPark Floating Rate on September 19, 2024 and sell it today you would lose (44.00) from holding PennantPark Floating Rate or give up 3.91% of portfolio value over 90 days.

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

PennantPark Floating Rate  vs.  Enersys

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.

Enersys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enersys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with PennantPark Floating and Enersys

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

The idea behind PennantPark Floating Rate and Enersys 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.