Correlation Between PennantPark Investment and Cogobuy
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Cogobuy 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 Cogobuy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Cogobuy Group, you can compare the effects of market volatilities on PennantPark Investment and Cogobuy 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 Cogobuy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Cogobuy.
Diversification Opportunities for PennantPark Investment and Cogobuy
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and Cogobuy is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Cogobuy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogobuy Group 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 Cogobuy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogobuy Group has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Cogobuy go up and down completely randomly.
Pair Corralation between PennantPark Investment and Cogobuy
Assuming the 90 days horizon PennantPark Investment is expected to generate 1.52 times less return on investment than Cogobuy. But when comparing it to its historical volatility, PennantPark Investment is 2.96 times less risky than Cogobuy. It trades about 0.06 of its potential returns per unit of risk. Cogobuy Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Cogobuy Group on August 27, 2024 and sell it today you would earn a total of 1.00 from holding Cogobuy Group or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. Cogobuy Group
Performance |
| Timeline |
| PennantPark Investment |
| Cogobuy Group |
PennantPark Investment and Cogobuy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Cogobuy
The main advantage of trading using opposite PennantPark Investment and Cogobuy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Cogobuy 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 Cogobuy will offset losses from the drop in Cogobuy's long position.| PennantPark Investment vs. NORTHEAST UTILITIES | PennantPark Investment vs. LG Electronics | PennantPark Investment vs. Benchmark Electronics | PennantPark Investment vs. Ultra Clean Holdings |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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