Correlation Between PennantPark Investment and REINET INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and REINET INVESTMENTS 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 REINET INVESTMENTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and REINET INVESTMENTS SCA, you can compare the effects of market volatilities on PennantPark Investment and REINET INVESTMENTS 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 REINET INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and REINET INVESTMENTS.
Diversification Opportunities for PennantPark Investment and REINET INVESTMENTS
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PennantPark and REINET is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and REINET INVESTMENTS SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REINET INVESTMENTS SCA 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 REINET INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REINET INVESTMENTS SCA has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and REINET INVESTMENTS go up and down completely randomly.
Pair Corralation between PennantPark Investment and REINET INVESTMENTS
Assuming the 90 days horizon PennantPark Investment is expected to generate 0.7 times more return on investment than REINET INVESTMENTS. However, PennantPark Investment is 1.43 times less risky than REINET INVESTMENTS. It trades about 0.07 of its potential returns per unit of risk. REINET INVESTMENTS SCA is currently generating about -0.01 per unit of risk. If you would invest 660.00 in PennantPark Investment on October 25, 2024 and sell it today you would earn a total of 14.00 from holding PennantPark Investment or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. REINET INVESTMENTS SCA
Performance |
| Timeline |
| PennantPark Investment |
| REINET INVESTMENTS SCA |
PennantPark Investment and REINET INVESTMENTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and REINET INVESTMENTS
The main advantage of trading using opposite PennantPark Investment and REINET INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, REINET INVESTMENTS 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 REINET INVESTMENTS will offset losses from the drop in REINET INVESTMENTS's long position.| PennantPark Investment vs. Heidelberg Materials AG | PennantPark Investment vs. PICKN PAY STORES | PennantPark Investment vs. Rayonier Advanced Materials | PennantPark Investment vs. COSTCO WHOLESALE CDR |
| REINET INVESTMENTS vs. PLAYMATES TOYS | REINET INVESTMENTS vs. American Airlines Group | REINET INVESTMENTS vs. JAPAN AIRLINES | REINET INVESTMENTS vs. China Eastern Airlines |
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 Stocks Directory module to find actively traded stocks across global markets.
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