Correlation Between PennantPark Investment and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Solstad Offshore 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 Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Solstad Offshore ASA, you can compare the effects of market volatilities on PennantPark Investment and Solstad Offshore 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 Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Solstad Offshore.
Diversification Opportunities for PennantPark Investment and Solstad Offshore
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PennantPark and Solstad is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA 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 Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Solstad Offshore go up and down completely randomly.
Pair Corralation between PennantPark Investment and Solstad Offshore
Assuming the 90 days horizon PennantPark Investment is expected to generate 15.46 times less return on investment than Solstad Offshore. But when comparing it to its historical volatility, PennantPark Investment is 2.35 times less risky than Solstad Offshore. It trades about 0.03 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 276.00 in Solstad Offshore ASA on September 2, 2024 and sell it today you would earn a total of 73.00 from holding Solstad Offshore ASA or generate 26.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. Solstad Offshore ASA
Performance |
| Timeline |
| PennantPark Investment |
| Solstad Offshore ASA |
PennantPark Investment and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Solstad Offshore
The main advantage of trading using opposite PennantPark Investment and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Solstad Offshore 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 Solstad Offshore will offset losses from the drop in Solstad Offshore'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 |
| Solstad Offshore vs. CN MODERN DAIRY | Solstad Offshore vs. CAL MAINE FOODS | Solstad Offshore vs. JJ SNACK FOODS | Solstad Offshore vs. Austevoll Seafood ASA |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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