Correlation Between PennantPark Investment and Broadwind
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Broadwind 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 Broadwind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Broadwind, you can compare the effects of market volatilities on PennantPark Investment and Broadwind 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 Broadwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Broadwind.
Diversification Opportunities for PennantPark Investment and Broadwind
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PennantPark and Broadwind is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Broadwind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadwind 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 Broadwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadwind has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Broadwind go up and down completely randomly.
Pair Corralation between PennantPark Investment and Broadwind
Assuming the 90 days horizon PennantPark Investment is expected to generate 0.41 times more return on investment than Broadwind. However, PennantPark Investment is 2.42 times less risky than Broadwind. It trades about 0.02 of its potential returns per unit of risk. Broadwind is currently generating about -0.06 per unit of risk. If you would invest 655.00 in PennantPark Investment on October 30, 2024 and sell it today you would earn a total of 3.00 from holding PennantPark Investment or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. Broadwind
Performance |
| Timeline |
| PennantPark Investment |
| Broadwind |
PennantPark Investment and Broadwind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Broadwind
The main advantage of trading using opposite PennantPark Investment and Broadwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Broadwind 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 Broadwind will offset losses from the drop in Broadwind's long position.| PennantPark Investment vs. Yuexiu Transport Infrastructure | PennantPark Investment vs. ECHO INVESTMENT ZY | PennantPark Investment vs. SEI INVESTMENTS | PennantPark Investment vs. MGIC INVESTMENT |
| Broadwind vs. CompuGroup Medical SE | Broadwind vs. PULSION Medical Systems | Broadwind vs. Corsair Gaming | Broadwind vs. Advanced Medical Solutions |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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