Correlation Between PennantPark Investment and Peel Mining
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Peel Mining 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 Peel Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Peel Mining Limited, you can compare the effects of market volatilities on PennantPark Investment and Peel Mining 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 Peel Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Peel Mining.
Diversification Opportunities for PennantPark Investment and Peel Mining
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and Peel is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Peel Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peel Mining Limited 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 Peel Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peel Mining Limited has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Peel Mining go up and down completely randomly.
Pair Corralation between PennantPark Investment and Peel Mining
Assuming the 90 days horizon PennantPark Investment is expected to generate 1.91 times less return on investment than Peel Mining. But when comparing it to its historical volatility, PennantPark Investment is 3.79 times less risky than Peel Mining. It trades about 0.06 of its potential returns per unit of risk. Peel Mining Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9.05 in Peel Mining Limited on September 14, 2024 and sell it today you would lose (2.00) from holding Peel Mining Limited or give up 22.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. Peel Mining Limited
Performance |
| Timeline |
| PennantPark Investment |
| Peel Mining Limited |
PennantPark Investment and Peel Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Peel Mining
The main advantage of trading using opposite PennantPark Investment and Peel Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Peel Mining 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 Peel Mining will offset losses from the drop in Peel Mining's long position.| PennantPark Investment vs. Ameriprise Financial | PennantPark Investment vs. Ares Management Corp | PennantPark Investment vs. Superior Plus Corp | PennantPark Investment vs. SIVERS SEMICONDUCTORS AB |
| Peel Mining vs. PennantPark Investment | Peel Mining vs. Sixt Leasing SE | Peel Mining vs. Lendlease Group | Peel Mining vs. PennyMac Mortgage Investment |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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