Correlation Between PennantPark Investment and Yokohama Rubber
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Yokohama Rubber 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 Yokohama Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and The Yokohama Rubber, you can compare the effects of market volatilities on PennantPark Investment and Yokohama Rubber 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 Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Yokohama Rubber.
Diversification Opportunities for PennantPark Investment and Yokohama Rubber
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and Yokohama is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and The Yokohama Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokohama Rubber 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 Yokohama Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokohama Rubber has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Yokohama Rubber go up and down completely randomly.
Pair Corralation between PennantPark Investment and Yokohama Rubber
Assuming the 90 days horizon PennantPark Investment is expected to generate 1.12 times less return on investment than Yokohama Rubber. In addition to that, PennantPark Investment is 1.48 times more volatile than The Yokohama Rubber. It trades about 0.1 of its total potential returns per unit of risk. The Yokohama Rubber is currently generating about 0.17 per unit of volatility. If you would invest 1,890 in The Yokohama Rubber on October 30, 2024 and sell it today you would earn a total of 150.00 from holding The Yokohama Rubber or generate 7.94% 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. The Yokohama Rubber
Performance |
| Timeline |
| PennantPark Investment |
| Yokohama Rubber |
PennantPark Investment and Yokohama Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Yokohama Rubber
The main advantage of trading using opposite PennantPark Investment and Yokohama Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Yokohama Rubber 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 Yokohama Rubber will offset losses from the drop in Yokohama Rubber's long position.| PennantPark Investment vs. Yuexiu Transport Infrastructure | PennantPark Investment vs. ECHO INVESTMENT ZY | PennantPark Investment vs. SEI INVESTMENTS | PennantPark Investment vs. MGIC INVESTMENT |
| Yokohama Rubber vs. Telecom Argentina SA | Yokohama Rubber vs. ULTRA CLEAN HLDGS | Yokohama Rubber vs. GMO Internet | Yokohama Rubber vs. Singapore Telecommunications Limited |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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