Correlation Between PennantPark Investment and Canadian National
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Canadian National 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 Canadian National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Canadian National Railway, you can compare the effects of market volatilities on PennantPark Investment and Canadian National 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 Canadian National. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Canadian National.
Diversification Opportunities for PennantPark Investment and Canadian National
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PennantPark and Canadian is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Canadian National Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian National Railway 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 Canadian National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian National Railway has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Canadian National go up and down completely randomly.
Pair Corralation between PennantPark Investment and Canadian National
Assuming the 90 days horizon PennantPark Investment is expected to generate 2.54 times more return on investment than Canadian National. However, PennantPark Investment is 2.54 times more volatile than Canadian National Railway. It trades about 0.08 of its potential returns per unit of risk. Canadian National Railway is currently generating about -0.04 per unit of risk. If you would invest 670.00 in PennantPark Investment on October 15, 2024 and sell it today you would earn a total of 18.00 from holding PennantPark Investment or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. Canadian National Railway
Performance |
| Timeline |
| PennantPark Investment |
| Canadian National Railway |
PennantPark Investment and Canadian National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Canadian National
The main advantage of trading using opposite PennantPark Investment and Canadian National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Canadian National 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 Canadian National will offset losses from the drop in Canadian National's long position.| PennantPark Investment vs. CARSALESCOM | PennantPark Investment vs. MUTUIONLINE | PennantPark Investment vs. SALESFORCE INC CDR | PennantPark Investment vs. Direct Line Insurance |
| Canadian National vs. PennantPark Investment | Canadian National vs. SMA Solar Technology | Canadian National vs. SEI INVESTMENTS | Canadian National vs. UPDATE SOFTWARE |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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