Correlation Between PennantPark Investment and Granite Construction
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Granite Construction 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 Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Granite Construction, you can compare the effects of market volatilities on PennantPark Investment and Granite Construction 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 Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Granite Construction.
Diversification Opportunities for PennantPark Investment and Granite Construction
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between PennantPark and Granite is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction 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 Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Granite Construction go up and down completely randomly.
Pair Corralation between PennantPark Investment and Granite Construction
Assuming the 90 days horizon PennantPark Investment is expected to generate 1.33 times more return on investment than Granite Construction. However, PennantPark Investment is 1.33 times more volatile than Granite Construction. It trades about 0.1 of its potential returns per unit of risk. Granite Construction is currently generating about -0.13 per unit of risk. If you would invest 617.00 in PennantPark Investment on October 30, 2024 and sell it today you would earn a total of 41.00 from holding PennantPark Investment or generate 6.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. Granite Construction
Performance |
| Timeline |
| PennantPark Investment |
| Granite Construction |
PennantPark Investment and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Granite Construction
The main advantage of trading using opposite PennantPark Investment and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Granite Construction 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 Granite Construction will offset losses from the drop in Granite Construction'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 |
| Granite Construction vs. Xenia Hotels Resorts | Granite Construction vs. Globex Mining Enterprises | Granite Construction vs. Mitsui Chemicals | Granite Construction vs. NH HOTEL GROUP |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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