Correlation Between Analog Devices and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Analog Devices 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 Analog Devices and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and PennantPark Investment, you can compare the effects of market volatilities on Analog Devices 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 Analog Devices with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and PennantPark Investment.
Diversification Opportunities for Analog Devices and PennantPark Investment
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Analog and PennantPark is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Analog Devices 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 Analog Devices 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 Analog Devices i.e., Analog Devices and PennantPark Investment go up and down completely randomly.
Pair Corralation between Analog Devices and PennantPark Investment
Considering the 90-day investment horizon Analog Devices is expected to under-perform the PennantPark Investment. In addition to that, Analog Devices is 1.39 times more volatile than PennantPark Investment. It trades about -0.13 of its total potential returns per unit of risk. PennantPark Investment is currently generating about 0.03 per unit of volatility. If you would invest 690.00 in PennantPark Investment on August 24, 2024 and sell it today you would earn a total of 4.00 from holding PennantPark Investment or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. PennantPark Investment
Performance |
| Timeline |
| Analog Devices |
| PennantPark Investment |
Analog Devices and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and PennantPark Investment
The main advantage of trading using opposite Analog Devices and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices 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.| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip Technology |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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