Correlation Between PennantPark Investment and Essentra Plc
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Essentra Plc 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 Essentra Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Essentra plc, you can compare the effects of market volatilities on PennantPark Investment and Essentra Plc 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 Essentra Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Essentra Plc.
Diversification Opportunities for PennantPark Investment and Essentra Plc
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PennantPark and Essentra is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Essentra plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essentra plc 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 Essentra Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essentra plc has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Essentra Plc go up and down completely randomly.
Pair Corralation between PennantPark Investment and Essentra Plc
Assuming the 90 days horizon PennantPark Investment is expected to generate 0.7 times more return on investment than Essentra Plc. However, PennantPark Investment is 1.43 times less risky than Essentra Plc. It trades about 0.06 of its potential returns per unit of risk. Essentra plc is currently generating about 0.0 per unit of risk. If you would invest 409.00 in PennantPark Investment on September 14, 2024 and sell it today you would earn a total of 243.00 from holding PennantPark Investment or generate 59.41% 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. Essentra plc
Performance |
| Timeline |
| PennantPark Investment |
| Essentra plc |
PennantPark Investment and Essentra Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Essentra Plc
The main advantage of trading using opposite PennantPark Investment and Essentra Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Essentra Plc 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 Essentra Plc will offset losses from the drop in Essentra Plc'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 |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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