Correlation Between PennantPark Floating and 053807AU7

Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and 053807AU7 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 053807AU7 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 AVT 3 15 MAY 31, you can compare the effects of market volatilities on PennantPark Floating and 053807AU7 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 053807AU7. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and 053807AU7.

Diversification Opportunities for PennantPark Floating and 053807AU7

0.5

Correlation Coefficient

PennantPark Floating  053807AU7

Very weak diversification

The 3 months correlation between PennantPark and 053807AU7 is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and AVT 3 15 MAY 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 053807AU7 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 053807AU7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 053807AU7 has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and 053807AU7 go up and down completely randomly.

Pair Corralation between PennantPark Floating and 053807AU7

Given the investment horizon of 90 days PennantPark Floating Rate is expected to under-perform the 053807AU7. But the stock apears to be less risky and, when comparing its historical volatility, PennantPark Floating Rate is 9.09 times less risky than 053807AU7. The stock trades about -0.17 of its potential returns per unit of risk. The AVT 3 15 MAY 31 is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  8,625  in AVT 3 15 MAY 31 on September 24, 2024 and sell it today you would lose (31.00) from holding AVT 3 15 MAY 31 or give up 0.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	71.43%
Values	Daily Returns

PennantPark Floating Rate  vs.  AVT 3 15 MAY 31

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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

053807AU7

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AVT 3 15 MAY 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 053807AU7 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PennantPark Floating and 053807AU7

The main advantage of trading using opposite PennantPark Floating and 053807AU7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, 053807AU7 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 053807AU7 will offset losses from the drop in 053807AU7's long position.

The idea behind PennantPark Floating Rate and AVT 3 15 MAY 31 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.