Correlation Between PennantPark Floating and Valneva SE

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

Diversification Opportunities for PennantPark Floating and Valneva SE

0.45

Correlation Coefficient

PennantPark Floating  Valneva SE

Very weak diversification

The 3 months correlation between PennantPark and Valneva is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR 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 Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Valneva SE go up and down completely randomly.

Pair Corralation between PennantPark Floating and Valneva SE

Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 0.29 times more return on investment than Valneva SE. However, PennantPark Floating Rate is 3.48 times less risky than Valneva SE. It trades about -0.03 of its potential returns per unit of risk. Valneva SE ADR is currently generating about -0.29 per unit of risk. If you would invest  1,122  in PennantPark Floating Rate on September 12, 2024 and sell it today you would lose (19.50) from holding PennantPark Floating Rate or give up 1.74% of portfolio value over 90 days.

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

PennantPark Floating Rate  vs.  Valneva SE ADR

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.

Valneva SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valneva SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with PennantPark Floating and Valneva SE

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

The idea behind PennantPark Floating Rate and Valneva SE ADR 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.