Correlation Between Associated Capital and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Associated Capital 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 Associated Capital and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated Capital Group and PennantPark Investment, you can compare the effects of market volatilities on Associated Capital 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 Associated Capital with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and PennantPark Investment.
Diversification Opportunities for Associated Capital and PennantPark Investment
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Associated and PennantPark is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Associated Capital 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 Associated Capital Group 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 Associated Capital i.e., Associated Capital and PennantPark Investment go up and down completely randomly.
Pair Corralation between Associated Capital and PennantPark Investment
Allowing for the 90-day total investment horizon Associated Capital Group is expected to generate 1.87 times more return on investment than PennantPark Investment. However, Associated Capital is 1.87 times more volatile than PennantPark Investment. It trades about 0.12 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.05 per unit of risk. If you would invest 3,218 in Associated Capital Group on August 23, 2024 and sell it today you would earn a total of 445.00 from holding Associated Capital Group or generate 13.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated Capital Group vs. PennantPark Investment
Performance |
| Timeline |
| Associated Capital |
| PennantPark Investment |
Associated Capital and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated Capital and PennantPark Investment
The main advantage of trading using opposite Associated Capital and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital 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.| Associated Capital vs. DWS Municipal Income | Associated Capital vs. Blackrock Munivest | Associated Capital vs. SEI Investments | Associated Capital vs. SCOR PK |
| PennantPark Investment vs. DWS Municipal Income | PennantPark Investment vs. Blackrock Munivest | PennantPark Investment vs. SEI Investments | PennantPark Investment vs. SCOR PK |
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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