Correlation Between PennantPark Investment and Reinsurance Group
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Reinsurance Group 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 Reinsurance Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Reinsurance Group of, you can compare the effects of market volatilities on PennantPark Investment and Reinsurance Group 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 Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Reinsurance Group.
Diversification Opportunities for PennantPark Investment and Reinsurance Group
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and Reinsurance is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group 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 Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Reinsurance Group go up and down completely randomly.
Pair Corralation between PennantPark Investment and Reinsurance Group
Assuming the 90 days horizon PennantPark Investment is expected to generate 1.79 times less return on investment than Reinsurance Group. But when comparing it to its historical volatility, PennantPark Investment is 1.08 times less risky than Reinsurance Group. It trades about 0.06 of its potential returns per unit of risk. Reinsurance Group of is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 14,715 in Reinsurance Group of on September 3, 2024 and sell it today you would earn a total of 6,885 from holding Reinsurance Group of or generate 46.79% 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. Reinsurance Group of
Performance |
| Timeline |
| PennantPark Investment |
| Reinsurance Group |
PennantPark Investment and Reinsurance Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Reinsurance Group
The main advantage of trading using opposite PennantPark Investment and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Reinsurance Group 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 Reinsurance Group will offset losses from the drop in Reinsurance Group's long position.| PennantPark Investment vs. Blackstone Group | PennantPark Investment vs. BlackRock | PennantPark Investment vs. The Bank of | PennantPark Investment vs. Ameriprise Financial |
| Reinsurance Group vs. MUENCHRUECKUNSADR 110 | Reinsurance Group vs. Superior Plus Corp | Reinsurance Group vs. NMI Holdings | Reinsurance Group vs. Origin Agritech |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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