Correlation Between Western Copper and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Western Copper and PennantPark Investment 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 Western Copper and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Copper and and PennantPark Investment, you can compare the effects of market volatilities on Western Copper and PennantPark Investment 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 Western Copper with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and PennantPark Investment.
Diversification Opportunities for Western Copper and PennantPark Investment
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and PennantPark is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Western Copper 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 Western Copper and are associated (or correlated) with PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of Western Copper i.e., Western Copper and PennantPark Investment go up and down completely randomly.
Pair Corralation between Western Copper and PennantPark Investment
Assuming the 90 days trading horizon Western Copper and is expected to under-perform the PennantPark Investment. In addition to that, Western Copper is 1.91 times more volatile than PennantPark Investment. It trades about -0.02 of its total potential returns per unit of risk. PennantPark Investment is currently generating about 0.04 per unit of volatility. If you would invest 614.00 in PennantPark Investment on August 28, 2024 and sell it today you would earn a total of 46.00 from holding PennantPark Investment or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Western Copper and vs. PennantPark Investment
Performance |
| Timeline |
| Western Copper |
| PennantPark Investment |
Western Copper and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and PennantPark Investment
The main advantage of trading using opposite Western Copper and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, PennantPark Investment 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 PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.| Western Copper vs. Superior Plus Corp | Western Copper vs. NMI Holdings | Western Copper vs. Origin Agritech | Western Copper vs. SIVERS SEMICONDUCTORS AB |
| PennantPark Investment vs. MGIC INVESTMENT | PennantPark Investment vs. Postal Savings Bank | PennantPark Investment vs. Apollo Investment Corp | PennantPark Investment vs. GREENX METALS LTD |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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