Correlation Between PennantPark Investment and Microsoft
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Microsoft 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 Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Microsoft, you can compare the effects of market volatilities on PennantPark Investment and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Microsoft.
Diversification Opportunities for PennantPark Investment and Microsoft
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and Microsoft is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Microsoft go up and down completely randomly.
Pair Corralation between PennantPark Investment and Microsoft
Assuming the 90 days horizon PennantPark Investment is expected to generate 1.28 times more return on investment than Microsoft. However, PennantPark Investment is 1.28 times more volatile than Microsoft. It trades about 0.06 of its potential returns per unit of risk. Microsoft is currently generating about 0.06 per unit of risk. If you would invest 438.00 in PennantPark Investment on September 2, 2024 and sell it today you would earn a total of 194.00 from holding PennantPark Investment or generate 44.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. Microsoft
Performance |
| Timeline |
| PennantPark Investment |
| Microsoft |
PennantPark Investment and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Microsoft
The main advantage of trading using opposite PennantPark Investment and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| PennantPark Investment vs. Ameriprise Financial | PennantPark Investment vs. Ares Management Corp | PennantPark Investment vs. Superior Plus Corp | PennantPark Investment vs. NMI Holdings |
| Microsoft vs. SIVERS SEMICONDUCTORS AB | Microsoft vs. Darden Restaurants | Microsoft vs. Reliance Steel Aluminum | Microsoft vs. Q2M Managementberatung AG |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |