Correlation Between PennantPark Investment and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and STMicroelectronics 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 STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and STMicroelectronics NV, you can compare the effects of market volatilities on PennantPark Investment and STMicroelectronics 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 STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and STMicroelectronics.
Diversification Opportunities for PennantPark Investment and STMicroelectronics
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PennantPark and STMicroelectronics is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics 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 STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and STMicroelectronics go up and down completely randomly.
Pair Corralation between PennantPark Investment and STMicroelectronics
Assuming the 90 days horizon PennantPark Investment is expected to generate 0.64 times more return on investment than STMicroelectronics. However, PennantPark Investment is 1.56 times less risky than STMicroelectronics. It trades about 0.02 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.13 per unit of risk. If you would invest 621.00 in PennantPark Investment on August 31, 2024 and sell it today you would earn a total of 12.00 from holding PennantPark Investment or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.23% |
| Values | Daily Returns |
PennantPark Investment vs. STMicroelectronics NV
Performance |
| Timeline |
| PennantPark Investment |
| STMicroelectronics |
PennantPark Investment and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and STMicroelectronics
The main advantage of trading using opposite PennantPark Investment and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| PennantPark Investment vs. Ameriprise Financial | PennantPark Investment vs. Ares Management Corp | PennantPark Investment vs. Superior Plus Corp | PennantPark Investment vs. NMI Holdings |
| STMicroelectronics vs. NVIDIA | STMicroelectronics vs. Taiwan Semiconductor Manufacturing | STMicroelectronics vs. Intel |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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