Correlation Between PennantPark Investment and SIERRA METALS
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and SIERRA METALS 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 SIERRA METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and SIERRA METALS, you can compare the effects of market volatilities on PennantPark Investment and SIERRA METALS 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 SIERRA METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and SIERRA METALS.
Diversification Opportunities for PennantPark Investment and SIERRA METALS
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PennantPark and SIERRA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and SIERRA METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIERRA METALS 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 SIERRA METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIERRA METALS has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and SIERRA METALS go up and down completely randomly.
Pair Corralation between PennantPark Investment and SIERRA METALS
Assuming the 90 days horizon PennantPark Investment is expected to generate 13.0 times less return on investment than SIERRA METALS. In addition to that, PennantPark Investment is 1.09 times more volatile than SIERRA METALS. It trades about 0.01 of its total potential returns per unit of risk. SIERRA METALS is currently generating about 0.19 per unit of volatility. If you would invest 54.00 in SIERRA METALS on October 28, 2024 and sell it today you would earn a total of 4.00 from holding SIERRA METALS or generate 7.41% 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. SIERRA METALS
Performance |
| Timeline |
| PennantPark Investment |
| SIERRA METALS |
PennantPark Investment and SIERRA METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and SIERRA METALS
The main advantage of trading using opposite PennantPark Investment and SIERRA METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, SIERRA METALS 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 SIERRA METALS will offset losses from the drop in SIERRA METALS's long position.| PennantPark Investment vs. RETAIL FOOD GROUP | PennantPark Investment vs. JIAHUA STORES | PennantPark Investment vs. FAST RETAIL ADR | PennantPark Investment vs. Daito Trust Construction |
| SIERRA METALS vs. Apple Inc | SIERRA METALS vs. Apple Inc | SIERRA METALS vs. Apple Inc | SIERRA METALS vs. Apple Inc |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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