Correlation Between PennantPark Investment and High Liner
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and High Liner 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 High Liner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and High Liner Foods, you can compare the effects of market volatilities on PennantPark Investment and High Liner 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 High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and High Liner.
Diversification Opportunities for PennantPark Investment and High Liner
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennantPark and High is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods 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 High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and High Liner go up and down completely randomly.
Pair Corralation between PennantPark Investment and High Liner
Assuming the 90 days horizon PennantPark Investment is expected to generate 1.7 times more return on investment than High Liner. However, PennantPark Investment is 1.7 times more volatile than High Liner Foods. It trades about 0.07 of its potential returns per unit of risk. High Liner Foods is currently generating about -0.08 per unit of risk. If you would invest 660.00 in PennantPark Investment on October 25, 2024 and sell it today you would earn a total of 14.00 from holding PennantPark Investment or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. High Liner Foods
Performance |
| Timeline |
| PennantPark Investment |
| High Liner Foods |
PennantPark Investment and High Liner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and High Liner
The main advantage of trading using opposite PennantPark Investment and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.| PennantPark Investment vs. Heidelberg Materials AG | PennantPark Investment vs. PICKN PAY STORES | PennantPark Investment vs. Rayonier Advanced Materials | PennantPark Investment vs. COSTCO WHOLESALE CDR |
| High Liner vs. General Mills | High Liner vs. Danone SA | High Liner vs. Hormel Foods | High Liner vs. Kellogg Company |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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