Correlation Between PennantPark Investment and XMReality

Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and XMReality 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 Investment and XMReality into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PennantPark Investment and XMReality AB, you can compare the effects of market volatilities on PennantPark Investment and XMReality 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 Investment with a short position of XMReality. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and XMReality.

Diversification Opportunities for PennantPark Investment and XMReality

0.0

Correlation Coefficient

PennantPark Investment  XMReality

Pay attention - limited upside

The 3 months correlation between PennantPark and XMReality is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and XMReality AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XMReality AB and PennantPark Investment 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 Investment are associated (or correlated) with XMReality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XMReality AB has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and XMReality go up and down completely randomly.

Pair Corralation between PennantPark Investment and XMReality

If you would invest  680.00  in PennantPark Investment on September 17, 2024 and sell it today you would earn a total of  15.00  from holding PennantPark Investment or generate 2.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

PennantPark Investment  vs.  XMReality AB

PennantPark Investment

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PennantPark Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

XMReality AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XMReality AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, XMReality is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PennantPark Investment and XMReality

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

The idea behind PennantPark Investment and XMReality AB 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.