Correlation Between Bank of America and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both Bank of America and PennantPark Floating 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 Bank of America and PennantPark Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and PennantPark Floating Rate, you can compare the effects of market volatilities on Bank of America and PennantPark Floating 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 Bank of America with a short position of PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and PennantPark Floating.
Diversification Opportunities for Bank of America and PennantPark Floating
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and PennantPark is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate and Bank of America 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 Bank of America are associated (or correlated) with PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of Bank of America i.e., Bank of America and PennantPark Floating go up and down completely randomly.
Pair Corralation between Bank of America and PennantPark Floating
Considering the 90-day investment horizon Bank of America is expected to generate 15.41 times less return on investment than PennantPark Floating. But when comparing it to its historical volatility, Bank of America is 6.4 times less risky than PennantPark Floating. It trades about 0.1 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,148 in PennantPark Floating Rate on November 8, 2024 and sell it today you would earn a total of 1,025 from holding PennantPark Floating Rate or generate 32.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Bank of America vs. PennantPark Floating Rate
Performance |
| Timeline |
| Bank of America |
| PennantPark Floating Rate |
Bank of America and PennantPark Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and PennantPark Floating
The main advantage of trading using opposite Bank of America and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, PennantPark Floating 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 Floating will offset losses from the drop in PennantPark Floating's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Canadian Imperial Bank | Bank of America vs. Bank of Montreal |
| PennantPark Floating vs. First International Bank | PennantPark Floating vs. Mivtach Shamir | PennantPark Floating vs. Atreyu Capital Markets | PennantPark Floating vs. IDI Insurance |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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