Correlation Between PennantPark Investment and USWE SPORTS
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and USWE SPORTS 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 USWE SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and USWE SPORTS AB, you can compare the effects of market volatilities on PennantPark Investment and USWE SPORTS 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 USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and USWE SPORTS.
Diversification Opportunities for PennantPark Investment and USWE SPORTS
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and USWE is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS 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 USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and USWE SPORTS go up and down completely randomly.
Pair Corralation between PennantPark Investment and USWE SPORTS
Assuming the 90 days horizon PennantPark Investment is expected to under-perform the USWE SPORTS. But the stock apears to be less risky and, when comparing its historical volatility, PennantPark Investment is 1.27 times less risky than USWE SPORTS. The stock trades about -0.07 of its potential returns per unit of risk. The USWE SPORTS AB is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 76.00 in USWE SPORTS AB on September 21, 2024 and sell it today you would lose (2.00) from holding USWE SPORTS AB or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. USWE SPORTS AB
Performance |
| Timeline |
| PennantPark Investment |
| USWE SPORTS AB |
PennantPark Investment and USWE SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and USWE SPORTS
The main advantage of trading using opposite PennantPark Investment and USWE SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, USWE SPORTS 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 USWE SPORTS will offset losses from the drop in USWE SPORTS's long position.| PennantPark Investment vs. Ameriprise Financial | PennantPark Investment vs. Ares Management Corp | PennantPark Investment vs. Superior Plus Corp | PennantPark Investment vs. SIVERS SEMICONDUCTORS AB |
| USWE SPORTS vs. DIVERSIFIED ROYALTY | USWE SPORTS vs. EIDESVIK OFFSHORE NK | USWE SPORTS vs. PennantPark Investment | USWE SPORTS vs. XLMedia PLC |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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