Correlation Between PennantPark Investment and Japan Asia
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Japan Asia 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 Japan Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Japan Asia Investment, you can compare the effects of market volatilities on PennantPark Investment and Japan Asia 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 Japan Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Japan Asia.
Diversification Opportunities for PennantPark Investment and Japan Asia
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PennantPark and Japan is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Japan Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Asia Investment 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 Japan Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Asia Investment has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Japan Asia go up and down completely randomly.
Pair Corralation between PennantPark Investment and Japan Asia
Assuming the 90 days horizon PennantPark Investment is expected to generate 1.05 times more return on investment than Japan Asia. However, PennantPark Investment is 1.05 times more volatile than Japan Asia Investment. It trades about -0.05 of its potential returns per unit of risk. Japan Asia Investment is currently generating about -0.06 per unit of risk. If you would invest 662.00 in PennantPark Investment on September 13, 2024 and sell it today you would lose (13.00) from holding PennantPark Investment or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. Japan Asia Investment
Performance |
| Timeline |
| PennantPark Investment |
| Japan Asia Investment |
PennantPark Investment and Japan Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Japan Asia
The main advantage of trading using opposite PennantPark Investment and Japan Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Japan Asia 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 Japan Asia will offset losses from the drop in Japan Asia'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 |
| Japan Asia vs. Ameriprise Financial | Japan Asia vs. Ares Management Corp | Japan Asia vs. Superior Plus Corp | Japan Asia vs. SIVERS SEMICONDUCTORS AB |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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