Correlation Between PennantPark Floating and TLGY Acquisition

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

Diversification Opportunities for PennantPark Floating and TLGY Acquisition

-0.58

Correlation Coefficient

PennantPark Floating  TLGY Acquisition

Excellent diversification

The 3 months correlation between PennantPark and TLGY is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and TLGY Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TLGY Acquisition Corp 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 TLGY Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TLGY Acquisition Corp has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and TLGY Acquisition go up and down completely randomly.

Pair Corralation between PennantPark Floating and TLGY Acquisition

Given the investment horizon of 90 days PennantPark Floating Rate is expected to under-perform the TLGY Acquisition. In addition to that, PennantPark Floating is 11.3 times more volatile than TLGY Acquisition Corp. It trades about -0.04 of its total potential returns per unit of risk. TLGY Acquisition Corp is currently generating about 0.24 per unit of volatility. If you would invest  1,151  in TLGY Acquisition Corp on September 17, 2024 and sell it today you would earn a total of  13.00  from holding TLGY Acquisition Corp or generate 1.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

PennantPark Floating Rate  vs.  TLGY Acquisition Corp

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.

TLGY Acquisition Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TLGY Acquisition Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, TLGY Acquisition is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PennantPark Floating and TLGY Acquisition

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

The idea behind PennantPark Floating Rate and TLGY Acquisition Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.