Correlation Between PennantPark Investment and NOW
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and NOW 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 NOW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and NOW Inc, you can compare the effects of market volatilities on PennantPark Investment and NOW 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 NOW. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and NOW.
Diversification Opportunities for PennantPark Investment and NOW
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between PennantPark and NOW is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and NOW Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOW Inc 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 NOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOW Inc has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and NOW go up and down completely randomly.
Pair Corralation between PennantPark Investment and NOW
Assuming the 90 days horizon PennantPark Investment is expected to generate 1.37 times less return on investment than NOW. But when comparing it to its historical volatility, PennantPark Investment is 1.45 times less risky than NOW. It trades about 0.05 of its potential returns per unit of risk. NOW Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,060 in NOW Inc on December 2, 2024 and sell it today you would earn a total of 480.00 from holding NOW Inc or generate 45.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. NOW Inc
Performance |
| Timeline |
| PennantPark Investment |
| NOW Inc |
PennantPark Investment and NOW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and NOW
The main advantage of trading using opposite PennantPark Investment and NOW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, NOW 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 NOW will offset losses from the drop in NOW's long position.| PennantPark Investment vs. East Africa Metals | PennantPark Investment vs. Sunny Optical Technology | PennantPark Investment vs. VELA TECHNOLPLC LS 0001 | PennantPark Investment vs. DISTRICT METALS |
| NOW vs. MINCO SILVER | NOW vs. Harmony Gold Mining | NOW vs. Yanzhou Coal Mining | NOW vs. YATRA ONLINE DL 0001 |
Check out your portfolio center.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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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