Correlation Between PUBLIC STORAGE and PennantPark Investment

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

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

Diversification Opportunities for PUBLIC STORAGE and PennantPark Investment

-0.18

Correlation Coefficient

PUBLIC STORAGE  PennantPark Investment

Good diversification

The 3 months correlation between PUBLIC and PennantPark is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding PUBLIC STORAGE PRFO and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and PUBLIC STORAGE 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 PUBLIC STORAGE PRFO are associated (or correlated) with PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of PUBLIC STORAGE i.e., PUBLIC STORAGE and PennantPark Investment go up and down completely randomly.

Pair Corralation between PUBLIC STORAGE and PennantPark Investment

Assuming the 90 days trading horizon PUBLIC STORAGE is expected to generate 15.66 times less return on investment than PennantPark Investment. But when comparing it to its historical volatility, PUBLIC STORAGE PRFO is 1.63 times less risky than PennantPark Investment. It trades about 0.01 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  610.00  in PennantPark Investment on September 16, 2024 and sell it today you would earn a total of  59.00  from holding PennantPark Investment or generate 9.67% return on investment over 90 days.

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

PUBLIC STORAGE PRFO  vs.  PennantPark Investment

PUBLIC STORAGE PRFO

Risk-Adjusted Performance

0 of 100

Very Weak

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

PennantPark Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PennantPark Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PUBLIC STORAGE and PennantPark Investment

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

The idea behind PUBLIC STORAGE PRFO and PennantPark Investment 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.