Correlation Between PennantPark Investment and Central Japan
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Central Japan 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 Central Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Central Japan Railway, you can compare the effects of market volatilities on PennantPark Investment and Central Japan 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 Central Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Central Japan.
Diversification Opportunities for PennantPark Investment and Central Japan
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PennantPark and Central is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Central Japan Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Japan 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 Central Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Japan Railway has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Central Japan go up and down completely randomly.
Pair Corralation between PennantPark Investment and Central Japan
Assuming the 90 days horizon PennantPark Investment is expected to generate 1.53 times more return on investment than Central Japan. However, PennantPark Investment is 1.53 times more volatile than Central Japan Railway. It trades about 0.02 of its potential returns per unit of risk. Central Japan Railway is currently generating about -0.14 per unit of risk. If you would invest 655.00 in PennantPark Investment on October 29, 2024 and sell it today you would earn a total of 3.00 from holding PennantPark Investment or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. Central Japan Railway
Performance |
| Timeline |
| PennantPark Investment |
| Central Japan Railway |
PennantPark Investment and Central Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Central Japan
The main advantage of trading using opposite PennantPark Investment and Central Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Central Japan 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 Central Japan will offset losses from the drop in Central Japan'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 |
| Central Japan vs. Delta Electronics Public | Central Japan vs. Methode Electronics | Central Japan vs. NORWEGIAN AIR SHUT | Central Japan vs. FORWARD AIR P |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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